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Years of Schooling Wage Relative to No Schooling Percentage of People Relative Wage Paid to Human Capital Total Relative Wage No Schooling 0 1 0.4%

Years of

Schooling

Wage Relative

to No Schooling

Percentage of

People

Relative Wage

Paid to Human

Capital

Total Relative

Wage

No Schooling 0 1 0.4% 0 0.004
Partial Primary 4 1.65 0.8% 0.0052 0.0132
Complete Primary 8 2.43 1.9% 0.02717 0.04617
Incomplete Secondary 10 2.77 6.7% 0.11859 0.18559
Complete Secondary 12 3.16 36.2% 0.78192 1.14392
Incomplete Higher 14 3.61 22.4% 0.58464 0.80864
Complete Higher 16 4.11 31.6% 0.98276 1.29876
SUM 2.50028 3.50028

(a) Suppose that we are comparing two countries, i and j, that are similar in every respect except the education of their population. In Country i, all adults have 14 years of schooling. In Country j, all adults have 8 years of schooling. Calculate the ratio of output per worker in steady state in the two countries. Please show work/calculations.

(b) In a certain country, everyone in the labor force in the year 2000 had 12 years of education. In 1900 everyone in the labor force had 4 years of education. What was the average annual growth in income per worker that was due to the increase in education? Please show work/calculations.

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