2. Labor productivity is defined as Y/L, the amount of output divided by the amount of labor...
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2. Labor productivity is defined as Y/L, the amount of output divided by the amount of labor input. Start with the growth-accounting equation and show that the growth in labor productivity depends on growth in total factor productivity and growth in the capital–labor ratio.
In particular, show that
= +a .
Hint: You may find the following mathematical trick helpful. If z = wx, then the growth rate of z is approximately the growth rate of w plus the growth rate of x. That is, Dz/z ≈ Dw/w + Dx/x.
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