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4. The catch-up effect Consider the economies of Blahnik and Tralfamadore, both of which produce glops...

4. The catch-up effect

Consider the economies of Blahnik and Tralfamadore, both of which produce glops of gloop using only tools and workers. Suppose that, during the course of 10 years, the level of physical capital per worker rises by 4 tools per worker in each economy, but the size of each labor force remains the same.

Complete the following tables by entering productivity (in terms of output per worker) for each economy in 2017 and 2027.

Year

Blahnik

Physical Capital

Labor Force

Output

Productivity

(Tools per worker)

(Workers)

(Glops of gloop)

(Glops per worker)
2017 8 40 3,600
2027 12 40 4,320

Year

Tralfamadore

Physical Capital

Labor Force

Output

Productivity

(Tools per worker)

(Workers)

(Glops of gloop)

(Glops per worker)
2017 5 40 2,800
2027 9 40 4,240

Initially, the number of tools per worker was higher in Blahnik than in Tralfamadore. From 2017 to 2027, capital per worker rises by 4 units in each country. The 4-unit change in capital per worker causes productivity in Blahnik to rise by a   amount than productivity in Tralfamadore. This illustrates the     effect.

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