Question
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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