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"In the endogenous growth model we studied, does an increase in

the labor share enhance long-run economic growth?
(a). yes
(b). no

1 Answer

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Final answer:

No, an increase in the labor share does not enhance long-run economic growth in the endogenous growth model.

Step-by-step explanation:

In the endogenous growth model, the labor share refers to the proportion of national income that goes to labor. According to the model, an increase in the labor share does not enhance long-run economic growth. This is because a higher labor share reduces the return to capital, which in turn reduces the incentives for firms to invest in physical capital and technological advancement.

User Sergey Beryozkin
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