In one of the EOC, the curriculum indicates that the increase in labor force participation rate increases per Capita GDP.
I can understand that the GDP increases, but doesnt labor participation also increase labor available(and thus the denominator)?
Also in the neoclassical model, only technology can bring a permanent increase in growth rate so I am not sure what model to use when answering these questions. Any advice would be helpful.
If your population is two people with only one of them earning $100,000/year, that’s $50,000/year per capita. If both of them are earning $100,000/year, that’s $100,000/year per capita.