The real wage increases with capital per worker

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One aspect we have not covered is how the real wage depends on capital per worker. It is easy to show that the real wage increases with capital per worker (because the marginal product of labor is higher when each worker operates with more capital). Take this result as given. Assume now that population growth n decreases with the real wage. The reason why n may depend on the real wage in such a way is that women tend to participate more in the labor market when wages are higher, and as a result fertility decreases. Show how the effects of educational policies that improve educational attainment in developing countries are understated if one ignores the effects on fertility.

Reference no: EM131009997

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