The way that decrease in the rate of population growth (n) affects the steady-state value of each variable in the Solow model are:
- Capital stock per worker (k-) Increases
- Output per worker (y) -Increases
- The marginal product of capital (MPK) -Increases
- The growth rate of total output (Y) -Decreases
- The capital-output ratio (k/y) -Decreases
- The savings rate (s)- Stays the same
In terms of lower population growth rate, there are fewer new workers entering the workforce each year. This means that there is more capital available for each worker, leading to an increase in the capital stock per worker.
So, one can say that Increased capital per worker can lead to higher output per worker, as workers have more resources to work with. This is because capital is a key factor in production, and more capital can enhance the productivity of workers.