Problem 2 (30%) Consider the following data on output, physical capital and human capital per worker. Output per worker Yt/Lt Physical capital per worker Kt/Ly Human capital h 2000 1.00 1.00 1 2010 1.10 1.10 1.10 2020 1.21 1.32 1.32 tmona5.cloudfront.net/lib/pdfjs/1.9.426/web/vie..59elaae773f7e807aecaa41a2d0e2e12378771b5c520581 Assume that the production function in year t is Y. = A. K. (h, L. ) 1-a, where Y, is output, At is productivity, K, is physical capital, he is human capital and L, is employment. o is assumed to be 1/2. a) Derive the intensive form of the production function (i.e., output rel- ative to employment, Y+/L.). b) Calculate growth rates in yt = Yt/Lt, kt = Kt/ Lt and he from (i) 2000 to 2010 and (ii) 2010 to 2020. c) Using the method of growth accounting, calculate growth in produc- tivity from (i) 2000 to 2010 and (ii) 2010 to 2020. d) Policymakers claim that growth in output per worker over the 2000- 2020 period was mainly coming from factor accumulation. Evaluate this claim. e) New information reveals that schooling quality deteriorated between 2010 and 2020. The statistical office therefore adjusts their estimate of h in 2020 down to 0.99. Explain how this would affect your answer in c) and d). Problem 3 (30%)

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