Question

Suppose physical capital per worker increased to $60,000 between 1990 and 2000, and output per worker increased by $45,000 over the same time period. What percentage of productivity growth can be attributed to growth in total factor productivity

Answer 1

Answer:

66.67%

Explanation:

We are told that the initial capital per worker is $30,000. Also, that the capital per worker eventually rises to $60,000. From both, we can calculate the change in capital per worker to be

(60,000 – 30,000). = $30,000

The change in output per worker is given to be $45,000. This then means that it's productivity growth attributed to growth in total factor productivity is will be follows:

Growth Rate = (Change in Input) / (Change in Output) x 100%

Growth Rate = 30,000 / 45,000 x 100

Growth Rate = 66.67%