What magnitude does ratio of savings rate in two countries

Reference no: EM13210327

Suppose that we are comparing two countries, i and j, that are similar in every respect except the education of their population. In Country i, all adults have 10 years of schooling. In Country j, all adults have 4 years of schooling.

You are told that the ratio of the actual output per worker of country j to the actual output per worker of country i is 0.3. You suspect that differences in savings rates (s) between the two countries may also explain the difference in the countries' output per worker. What magnitude does the ratio of savings rate in the two countries have to be in order to account for the actual difference in the countries' output per worker?

Reference no: EM13210327

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