In the Solow growth model, if labour input, L(0), increases, then in the steady state:
A)output per worker grows faster.
B)capital per worker grows at the same rate, zero.
C)capital per worker grows faster.
D)all of the above.

Question

Quizplus · Accepted Answer

In the Solow growth model, an increase in labor input (L(0)) does not change the growth rates of output per worker or capital per worker in the steady state. Both output per worker and capital per worker grow at a rate of zero in the steady state, regardless of changes in the labor force.

In the Solow Growth Model, If Labour Input, L(0), Increases