In the real world, we usually consider education level as a proxy to human capital. To examine the theory, what suggestions can you make to growth economists? What are factors other than education can you think of that contribute to human capital?
Suppose that we modify the Solow growth model by allowing long-run technological progress. That is, suppose that z = 1 for convenience and that there is labor-augmenting technological progress, with a production function
Y =F(K,bN)
where b denotes the number of units of "human capital" per worker, and bN is "efficiency units" of labor. Letting b' denote future human capital per worker, assume that b' = (1 + f ) b, where f is the growth rate in human capital.
(c) In the real world, we usually consider education level as a proxy to human capital. To examine the theory, what suggestions can you make to growth economists? What are factors other than education can you think of that contribute to human capital?
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