Richland and Poorland have identical production functions, depreciation rates, and labor productivity growth rates. Richland saves at its Golden Rule rate and has a lower population growth rate. Poorland saves at a rate lower than its Golden Rule savings rate (compared to Richland) and has a higher population growth rate ( compared to Richland). Both countries are currently at steady states. A. Carefully draw two Solow-type graphs: one for Richland and one for Poorland demonstrating their steady state equilibria. B. Suppose a significant amount of labor migrates from Poorland to Richland. Demonstrate this on your graphs. C. What happens in the short run and in the long run? Show this on your graphs. D. Explain whether mass migration from the poor to the rich countries may solve the problem of poverty in the long run. It is important that you draw the graphs accurately and with correct labels. draw the graphs
Richland and Poorland have identical production functions, depreciation rates, and labor productivity growth rates. Richland saves at its Golden Rule rate and has a lower population growth rate. Poorland saves at a rate lower than its Golden Rule savings rate (compared to Richland) and has a higher population growth rate ( compared to Richland). Both countries are currently at steady states. A. Carefully draw two Solow-type graphs: one for Richland and one for Poorland demonstrating their steady state equilibria. B. Suppose a significant amount of labor migrates from Poorland to Richland. Demonstrate this on your graphs. C. What happens in the short run and in the long run? Show this on your graphs. D. Explain whether mass migration from the poor to the rich countries may solve the problem of poverty in the long run. It is important that you draw the graphs accurately and with correct labels. draw the graphs
Chapter20: Economic Growth In The Global Economy
Section: Chapter Questions
Problem 4P
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