Contemporary Labor Economics
11th Edition
ISBN: 9781259290602
Author: Campbell R. McConnell, Stanley L. Brue, David Macpherson
Publisher: McGraw-Hill Education
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Chapter 4, Problem 7QS
To determine
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How does a college education increase ones human capital
Discuss how empirical studies estimate the rate of return to schooling and the methods used to avoid the problem of ability bias.
What does human capital theory assume?
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- how Thomas Piketty relates the return on capital (r) to the rate of economic growth (g) in the context of inequalityarrow_forwardQuestion 8. Consider an economy in which there are 200 workers. 3/4 of the workers are endowed with 100 units of the consumption good when young and nothing when old. The remaining workers are endowed with 20 units of the good when young and nothing when old. Each worker saves 50% of their endowment when young. Let the gross rate of return on capital be 1.25. There are 50 entrepreneurs in the economy. Each entrepreneur is endowed with 50 units of the consumption when young and nothing when old. Entrepreneurs only want to consume when they are old. Let the stock of money be constant over time. Assume that each worker uses 20 goods to identify herself and make a withdrawal from the bank. At date t, there is a permanent increase in the return on capital to 1.3 1. Compute GDP in period t and t +1arrow_forwardExplain why a capitalist economic system tends to bring about a highly unequal distribution of income. Why did income inequality rise significantly in the U.S. after about 1980?arrow_forward
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