Suppose in the Solow growth model that F(K,N)=K^aN^1a, where 0

Ki=(1d)Ki +s (rKi+w),

where r is the rental rate of capital and w is the real wage. Determine what happens to eachindividual's share of total aggregate income in the steady state, and explain your results.

Eachindividual's share of the capital stock in the long run will be

different,

the same,

as ki

willconvergetosw / (1a)(n+d).

converges to a different value for each individual.

willconvergeto(s/n+d)^(1/(1a))

Therefore, in the long run each individual will earn

the same income,

different incomes,

as everyone has

the same

a different

quantity of capital and supplies

a different

the same

quantity of labour.