32 votes
Accepted

Does recycling lead to fewer jobs?

Any invention that replaces human labor puts an end to that specific task. Glass recycling eliminates (or decrease) the need for silica-gathering task. Typewriter eliminates the need for printing ...
Art's user avatar
  • 2,784
27 votes
Accepted

Why do wages not equalize across space?

There are several explanations for this in the literature (the order does not necessarily reflect importance of each explanation). Different Price Levels: Non-trivial portion of the wage differential ...
1muflon1's user avatar
  • 55.6k
22 votes
Accepted

Why are real median household incomes stagnant?

The metric of median household income is also used by others to argue the presence of income inequality: https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#Causes However, it seems ...
Giskard's user avatar
  • 29.2k
21 votes

Why do wages not equalize across space?

I would add two more, and rather primitive, factors in @1muflon1 long list: Labor input is not perfectly mobile with respect to the wage. We should never forget that the concept of a utility function ...
Alecos Papadopoulos's user avatar
13 votes

What is the difference between contract theory and mechanism design?

Contracts are a subset of all mechanisms where agreements are enforcable. An example of a mechanism that is not a contract: A second price auction (or Vickrey auction) is a truth-telling mechanism ...
Giskard's user avatar
  • 29.2k
9 votes
Accepted

Why has increased productivity over the last 100 years not affected how much people work?

Let's work such a very simple model. We have a Robinson Crusoe island economy, an isolated individual that lives totally alone. In order to consume something Crusoe must work. Assume for even more ...
Alecos Papadopoulos's user avatar
9 votes

What determines whether slavery is economically efficient in industrialized/modern era economies?

Necessary Caveats When Discussing Slavery: First before tackling this question it is important to note that this issue is broad and complex. This is because there is no single 'slavery'. For example, ...
1muflon1's user avatar
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9 votes

Field experiments on labour market discrimination: do sizes of randomly assigned groups matter?

No, this should not be a major issue. We will very carefully take into account the different sample sizes. Allow me to continue your example: Assume "Resume A" is the the treatment resume ...
RegressForward's user avatar
8 votes
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What keeps minimum wage rates in balance?

How is the minimum wage determined? Yes and no. It is a political choice, but with economic reasoning. In the end, that's the case for every economic rule, maybe with the exception of monetary rules, ...
FooBar's user avatar
  • 10.7k
8 votes

Term for fraction of economic value earned?

You seem to be looking for the phrase 'wage share' or 'share of labour compensation'. Wage share: The wage share (or labor share) is the ratio between compensation of employees (according to the ...
Giskard's user avatar
  • 29.2k
8 votes

Minimum Wage effects on Adjacent Cities

A very famous study in this direction is Card and Krueger (1994). They look an increase in the minimum wage in New Jersey in 1992. While New Jersey raised the minimum wage from USD 4.25/h to USD 5.05/...
Bayesian's user avatar
  • 5,280
8 votes

Analyzing Farm Bureau's claim that milk prices would double at the retail level if all the illegals were deported

It is worth noting that OP's original question before I edited it asked, "why would economists lie to us?" This already leaves a poor taste in my mouth; such a question is loaded enough as it is, only ...
Kitsune Cavalry's user avatar
  • 6,608
8 votes

How did we arrive to 40 hr work week?

The 40-week comes started with the movement of the 8h working day. The wikipedia article makes a quick summary of the historical progress of thinking from 12h work days in Britain during the ...
JoaoBotelho's user avatar
  • 2,145
8 votes

Lack of skilled IT workforce, but they do not raise wages

The factual observations you've listed fit neatly with the law of supply. You've seen that wages (price) have fallen, and during the same period, supply has gone down. The fact that companies ...
Dan's user avatar
  • 1,346
7 votes

What is the difference between contract theory and mechanism design?

As the previous answer mentions Contract Theory is a subset of Mechanism Design. Contract Theory is the study of Mechanism Design restricted to a single agent, i.e how to incentivize a single agent ...
Fatsho's user avatar
  • 171
7 votes

What is feminist economics?

Feminist Economics is a broad field covering, broadly, how gender relates to the trade-offs involved in circumstances of scarcity. Economics as a field was dominated by men for a long time. As a ...
410 gone's user avatar
  • 8,143
7 votes

Field experiments on labour market discrimination: do sizes of randomly assigned groups matter?

They generally measure the probability of getting an interview, not the number of interviews, so that that the number of applications is normalized out. For example, consider Are Emily and Greg More ...
BKay's user avatar
  • 16.3k
7 votes
Accepted

Deriving aggregate output from labor demand and supply

Use $W_{i}=V \cdot \frac{P_{i}^{\beta}}{Z_{i}}=VQ_i$, then $$L_{i}=\left(\frac{\alpha^{1-\eta} \eta^{\eta}}{R^{\eta}} \cdot \frac{A_{i}}{(V_{i} Q_{i})^{1-\eta}}\right)^{\frac{1}{1-\alpha-\eta}} \cdot ...
Alalalalaki's user avatar
  • 2,419
7 votes
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When can one drop time subscripts? Example from Angrist and Kugler (2003)

Because "adjustment costs are linear and there is no aggregate uncertainty", the FOC for $N_t$ is $$f'\theta g_N(N_{t}, I_{t}) - w_N = \phi \lambda C_N$$. Notice that this is exactly the ...
Alalalalaki's user avatar
  • 2,419
6 votes

Why are real median household incomes stagnant?

Three points - one which has already been raised much better by denesp: Are household sizes the same (we see the answer as no)? How about amount of earners per household? What about the amount of ...
DoubleVu's user avatar
  • 161
6 votes
Accepted

Which foreign workers in USA who send remittances to family are getting the best bang for their buck?

A good start would be The Economics of Migrants' Remittances by Hillel Rapoport and Frédéric Docquier. They both work extensively on this topic. In this paper, they review the theoretical and ...
emeryville's user avatar
  • 6,935
6 votes
Accepted

Why does immigration boost the economy? (or does it not...?)

You’re right, the migration of workers boost the economy. It’s a stylized fact. It may have political consequences, though, but it is not the part of the analysis of economics. Let’s consider $A$ the ...
Übel Yildmar's user avatar
6 votes
Accepted

Why don't prices of USA labor and Mexican labor equalise?

The underlying reason for persistent wage differences is probably that Mexican workers are less productive than American workers. It is sufficient that workers in some tradeable sectors are more ...
Tobias's user avatar
  • 970
6 votes

Lack of skilled IT workforce, but they do not raise wages

Developing a point made in Dan's answer, it is important to distinguish between a movement along a supply curve and a shift of the whole curve, in this case the supply curve for skilled IT personnel. ...
Adam Bailey's user avatar
  • 8,346
6 votes
Accepted

Can the theory of the second best mathematically justify labor unions in some scenarios?

Quoting your quote, emphasis altered by me: The “theory of the second best” clearly argues that once markets depart at all from perfect competition, efficiency may well be increased by further ...
Giskard's user avatar
  • 29.2k
5 votes
Accepted

How does economic theory handle full automation of production resulting in full unemployment?

If this were to occur, there are three things we need to look at. 1) Will production occur? 2) Without wages, how will households make money? 3) What will be the welfare effects? $\textbf{1)}$ To ...
DornerA's user avatar
  • 1,568
5 votes

When and why women left the labour market?

They worked at home. Like "Household Engineers" do today, doing everything working from down to dusk like their husbands, and like their husband they shared in the earnings of the household. Until the ...
marli's user avatar
  • 51
5 votes

Welfare analysis for a military draft

An obligatory draft is a tax collected in kind - productive time. Instead of producing in the private sector, citizens of the economy offer their services to the army. Now, we should acknowledge ...
Alecos Papadopoulos's user avatar
5 votes
Accepted

Exam question implies that a perfect labour market can have wage differentials?

The question (implicitly) assumes that there are relevant skill differences in the population. As you say, it is true that in a perfect labor market there are no wage differences if workers can move ...
BB King's user avatar
  • 6,138
5 votes
Accepted

Real Business Cycle Theory

It's from King and Rebelo (2000) "Resuscitating Real Business Cycles". Here is a link to the NBER working paper version. The graph is in Figure 8 on p.94.
Herr K.'s user avatar
  • 15.4k

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