Augmented Solow Growth Model
In contemporary economics, a model is a scientific depiction of some feature of the frugality. The Solow model basis is around two equalities, a capital accretion equation, and the production function. A model consists of various equations that describe the relationship among a collection of variables whose values are determined within the model itself; in other words called endogenous variables (Gruescu, 2007).
The Solow model appeals to variances in venture rates and population growth rates and to exogenous variances in technology to elucidate alterations in per capita proceeds. Furthermore, investing more and having lower population growth rates, allows countries to accumulate more capital per worker and thus increase labor productivity (Neuhaus, 2006).
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As economies amass capital and become wealthier, they dedicate more capitals to capitalize in people. They do so by improving schooling, health care, and on-the-job training. This investment increases the human capital, which in turn increases productivity. The Solow model basis is around two equalities, a capital accretion equation, and the production function.
Empirical results support the notion that contemporary income differences are highly influenced by both the year of the take-off and post take-off influences captured by the neoclassical growth model. By adding the onset of the fertility transition to the neoclassical growth model, we improve the empirical fit considerably.
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Bodvarsson, O. B., & Van Den Berg, H. (2013). The economics of immigration theory and policy. New York, NY, Springer. http://dx.doi.org/10.1007/978-1-4614-2116-0.
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