Which of the following is NOT a real world factual conflict with the neoclassical growth model?
A)Income per capita varies greatly across countries.
B)Poor countries do not have a higher rate of return on capital.
C)Immigrant labor from poor countries experiences very small increases in income when it moves to rich countries.
D)Poor countries' income levels have not converged to the income levels of rich countries.

Question

Quizplus · Accepted Answer

The neoclassical growth model predicts that labor moving from a low-productivity (poor) country to a high-productivity (rich) country should experience significant increases in income, which is contrary to option C. This option is not a factual conflict with the model, as the model would actually predict substantial income gains for such immigrant labor, aligning with real-world observations that immigrants often do experience significant income increases when moving to richer countries.

Which of the Following Is NOT a Real World Factual