01:220:103 Lecture Notes - Lecture 6: Growth Accounting, Factors Of Production, Production Function
Document Summary
Labor productivity refers to output per worker in a given time. Physical capital-consists of human-made resources such as buildings and machines. Human capital- the improvement in labor created by the education and knowledge embodied in the workforce. Technological progress- the advance in the technical means for the production of goods and services. Hypothetical function that shows how productivity (real gdp per worker) depends on: 1). the quantities of physical capital per worker. Exhibits diminishing returns to physical capital, when amount of human capital and technology is fixed, so increase in physical capital per worker leads to a smaller increase in productivity (bc power of physical capital is less than one) Growth accounting estimates the contribution of each major factor in the aggregate production function to economic growth. Total factor productivity (tfp) the amount of output that can be achieved with a given amount of factor inputs. Generally, abundant of natural resources are richer than countries with scarce natural resources.
