MacroBusiness, for years, has blamed much of Australia’s productivity slump on ‘capital shallowing’, which occurs when the nation’s population grows faster than business, infrastructure, and housing investment.
This situation leaves workers with less capital, resulting in less output per hour and a lower growth rate per capita.
As a stylised example, assume that you run a cafe with one coffee machine and two employees operating it, generating 100 coffees each hour.
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