Level of income per capita-growth rates of income per capita

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Suppose there are two countries. In the rich country the representative consumer has Hr units of human capital, and total factor productivity is Zr. In the poor country, the representative consumer has Hp units of human capital, and total factor productivity is Zp. Assume that the b and u are the same in the rich and poor countries, and that Hr > Hp and Zr > Zp.

A. How do (i) the levels of income per capita, (ii) the growth rates of income per capita, and (iii) real wages (wH) compare between the rich and poor countries?

B. If consumers could choose their country of residence, where would they want to live? Explain

Reference no: EM13696726

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