In order to find steady state consumption per worker, which formula is primarily used?

The formula that is primarily used to find steady state consumption per worker is based on the relationship between total output (y), consumption (c), and investment (i). In the context of steady state analysis in macroeconomic models, particularly those involving growth, the correct expression is that consumption per worker (c) is equal to output per worker (y) minus investment per worker (i).

This relationship captures the idea that in a steady state, the total output of an economy is allocated between consumption and investment. Investment is required to maintain the capital stock and support economic growth. Hence, the consumption that each worker can enjoy is determined by the output they generate, less what is being invested back into the economy.

This understanding is crucial because it illustrates how consumption is directly linked to productivity, and how investment impacts future consumption levels. In a steady state, we generally assume that the economy is neither growing nor shrinking in terms of capital per worker, leading to a stable level of consumption that reflects this output-investment balance.