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Chapter 6 3. The following table presents data about the highest levels of schooling among the
adult population in a country in 2010. Calculate the fraction of wages that represents return to
human capital at each level of education (Use the method on page 162 in the text) 4. Suppose
that we are comparing two countries, ? and j, that are similar in every respect except the
education of their population. In country I and j, all adults have 10 years of schooling. In country
j, all adults have 4 years of schooling. Calculate the ratio of output per worker in steady state in
the two countries. Use the relevant data on wage from the table in problem 3.
Solution
3. To calculate fraction of wage that represents return to human capital we will use the formula,
Fraction = (Wage relative to no schooling at a given educational level - wage of no schooling) /
Wage relative to no schooling at a given educational level.
Level of schooling Fraction wage
No schooling (1-1)/1 = 0
Partial primary 1.65-1 / 1.65 = 0.393
Complete primary 2.43-1 / 2.43 = 0.588
incomplete secondary 2.77-1 / 2.77 = 0.638
complete secondary 3.16-1 / 3.16 = 0.683
incomplete higher 3.61-1 / 3.61 = 0.722
complete higher (4.11-1)/4.11 = 0.75
Chapter 6 3- The following table presents data about the highest level.docx

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Chapter 6 3- The following table presents data about the highest level.docx

  • 1. Chapter 6 3. The following table presents data about the highest levels of schooling among the adult population in a country in 2010. Calculate the fraction of wages that represents return to human capital at each level of education (Use the method on page 162 in the text) 4. Suppose that we are comparing two countries, ? and j, that are similar in every respect except the education of their population. In country I and j, all adults have 10 years of schooling. In country j, all adults have 4 years of schooling. Calculate the ratio of output per worker in steady state in the two countries. Use the relevant data on wage from the table in problem 3. Solution 3. To calculate fraction of wage that represents return to human capital we will use the formula, Fraction = (Wage relative to no schooling at a given educational level - wage of no schooling) / Wage relative to no schooling at a given educational level. Level of schooling Fraction wage No schooling (1-1)/1 = 0 Partial primary 1.65-1 / 1.65 = 0.393 Complete primary 2.43-1 / 2.43 = 0.588 incomplete secondary 2.77-1 / 2.77 = 0.638 complete secondary 3.16-1 / 3.16 = 0.683 incomplete higher 3.61-1 / 3.61 = 0.722 complete higher (4.11-1)/4.11 = 0.75