In the Solow growth model,if two countries are otherwise identical (with the same production function,same saving rate,same depreciation rate,and same rate of population growth)except that Country Large has a population of one billion workers and Country Small has a population of 10 million workers,then the steady-state level of output per worker will be ______ and the steady-state growth rate of output per worker will be ______.

Question

Quizplus · Accepted Answer

The steady-state level of output per worker only depends on the production function, saving rate, and depreciation rate, but not on the population size. Therefore, it will be the same in both countries. Similarly, the steady-state growth rate of output per worker only depends on the rate of technological progress, which is assumed to be the same in both countries. Therefore, it will also be the same in both countries.

In the Solow Growth Model,if Two Countries Are Otherwise Identical