Steady State with Population Growth and Technological Progress

As the no. of effective worker increases, the capital per effective worker decreases. Hence, in the steady state, investment will be required to provide for loss of capital due to depreciation, for the new workers due to population growth and for the new effective workers due to increases in the efficiency of labor so that the capital per effective worker remains constant. Increase in the efficiency of labor leads to a decrease in the capital per effective worker just as did the depreciation and population growth in previous cases. Hence, the equation for steady state now becomes
?k = i – (a + n + g)k = 0
where g is the rate of growth of efficiency of labor.