(Solved): 1. Growth Accounting (3 marks). The graph below shows that the labor share in Australia has been d ...

1. Growth Accounting (3 marks). The graph below shows that the labor share in Australia has been declining since the late 1970s. Labour Share of Income* % US 60 60 Australia 55 55 50 50 OECD 045 2018 45 LLL 1978 1988 1998 2008 Compensation of employees divided by total factor income Sources: OECD, RBA Consider the statement in italics below. The declining labour share, which is expected to continue in the future, implies that Australia will experience faster economic growth (growth in GDP per capita) in the future. Assuming that the production function in Australia is the Cobb-Douglas production function, do you agree or disagree with this statement? Explain your reasoning.