Good morning everyone,
If I want to express the utility function per efficiency units of labor, is the new discount rate the following: beta.(1+n)(1+a) ? (n) being the growth rate of population and (a) the growth rate of labor technical progress, assuming that L(t)=(1+n).L(0), and A(t)=(1+a).A(0).
Besides, I often see in papers that all variables expressed in per capita terms are divided by the same L(t). My issue is that very often, that L(t) is expressed as the population. But why do they divide the consumption and the labor factor, for example, by the same L(t)? I find it odd since I would divide both by total employed persons, since they are the ones making consumption decisions and labor supply decisions. Or maybe most papers mistake “population” by the “workforce”.
Thank you in advance.