Suppose that we are comparing two countries, i and j, that are similar in every respect except the education of their population. In country i, all adults have 10 years of schooling. In country j, all adults have 4 years of schooling. The relative return to 10 years of schooling is 2.7, and the relative return to 4 years of schooling is 1.6 In other words, hi = 2.7 and hj = 1.6.
a. Solve for capital per worker in steady state for each country.
b. Solve for output per worker in steady state for each country.
c. Calculate the ratio of output per worker in steady state in the two countries. Interpret the answer.