32
votes
Did real incomes drop significantly since the 1950s?
Most of the US real earnings data which go only as far as mid 60s. According to the statista data presented in this article by world economic forum the evolution of real hourly earnings in the US for ...
- 58.5k
22
votes
Did real incomes drop significantly since the 1950s?
Average standard of living is massively higher today compared to the 1950s, primarly due to technological progress.
Even a cheap low end car today is much better than the big cars of the 1950s, it is ...
- 967
15
votes
Did real incomes drop significantly since the 1950s?
The book “The Two Income Trap” (2003) by Elizabeth Warren (recent Democratic presidential candidate) and Amelia Warren Tyagi discussed this. They looked at spending breakdowns in the 1970s and when ...
- 9,907
12
votes
Accepted
Is an "arms race" between wages and inflation inevitable?
How true is the original assertion?
The original assertion is poorly worded and not generally valid even if we ignore the wording. The assertion (at least a corrected version of it) can be true under ...
- 58.5k
10
votes
Accepted
When countries industrialise, why do jobs from agriculture shift to manufacturing?
This is a common area of study in Development Economics. There is for example the Dual-sector model, first developed in 1954. It is very well explained in the link provided, but basically:
[the] ...
- 8,631
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/...
- 5,301
6
votes
When countries industrialise, why do jobs from agriculture shift to manufacturing?
A schematic picture is as follows:
Industrialization also means industrialization of Agriculture. This kills land-related jobs in the sector while at the same time it increases output. Inceased ...
6
votes
Productivity vs real earnings in the US -- what happened ca 1974?
Here is one explanation, albeit focusing on the wider economy, and comparing median wages. Still the method applies:
This is taken from Bivens and Mishel (2015). In essence, they decompose labour ...
- 8,631
6
votes
What's the logic behind dividing rental price of capital and wage rate by price level?
Price level is the general level of prices in an economy. It is a variable that indicates what is the purchasing power of money (see Blanchard et al. Macroeconomics: a European Perspective). You can ...
- 58.5k
5
votes
Accepted
Putting a Price on Happiness
There are several approaches to this problem, none of them accurate as the human happiness is internal subjective experience and thus not verifiable by people other than the afflicted (it is not ...
- 462
5
votes
Nonlinear Least-Squares Estimation in Practice
Suppose the relationship between $y_{i,t}\equiv\log w_{i,t}$ and $z_{i,t}\equiv\left(s_{i,t},j_{i,t},e_{i,t},x_{i,t}\right)^{\top}$ is given by
$$y_{i,t}=g\left(z_{i,t}\right)+\varepsilon_{i,t},$$
...
- 366
5
votes
Is an "arms race" between wages and inflation inevitable?
Then a sizeable proportion of employers would need to do this to make a difference.
If we take the statement literally that it's talking about just one employer, rather than the effect in general of ...
- 779
4
votes
Productivity vs real earnings in the US -- what happened ca 1974?
The house is taking a percentage right off the top. In 1979, the top 1% of the population's share of U.S. income, including capital gains, was hovering around 9-10%, with the top 0.1% having about 2.5-...
4
votes
Has US real median personal/household income been stagnant since the late 1970's/early 1980's?
As said in the comments, there is an important difference between household income and wages. Household income includes income from capital. As a higher share of total income is going to capital than ...
- 8,631
4
votes
When countries industrialise, why do jobs from agriculture shift to manufacturing?
Aside from the economic arguments, a big difference was the amount of autonomy for the workers.
Consider agriculture and similar rural employment (as servants etc) in the UK, even as recently as 1900....
- 451
4
votes
Statistical distribution of wages and wealth
Globally, there is Lakner and Milanovik (2015)'s elephant graph:
Hellebrandt and Mauro (2015)
Thus, the two previous distributions look like bimodal log-normal distributions.
or CDFs, as in ...
- 1,435
4
votes
Accepted
How much average value does 1 working hour produce? ( are there reliable statistics?)
That is a great question. And it depends (famous economics response to anything).
Here are some of the factors on, “how much does 1 hour of work produces”:
- Persons education and training level
- ...
- 1,467
4
votes
Accepted
What does Smith mean by "price of work" in this context?
Smith was talking of "the price of work" as meaning the price of economic products bought from the employers and merchants, not the price of labour bought from the workers.
"Work" ...
- 622
4
votes
Accepted
Can you prove, and with what assumptions, that a market will allocate some minimum amount of basic resources to every worker?
There is no guarantee that anyone in market economy earns some subsistence minimum. Generally, wage depends on marginal product of worker's labor and if there are some quasi-rents to be had also on ...
- 58.5k
4
votes
Accepted
I don't know why these two method yield different solutions for marginal product of labour
I am not sure why you expect method two to work, as generally
$$
\frac{\partial F(K,N)}{\partial N} \neq \frac{\partial F(K,N)}{\partial K}\frac{\partial K}{\partial N}.
$$
These are partial ...
- 29.7k
4
votes
Accepted
How is potential experience usually measured in the Mincer equation?
True that, in principle, we can approximate potential experience by age - schooling and that this is bound to depend on the assumptions made on entry into the labor market.
For the US, it seems to me ...
- 1,938
4
votes
Accepted
Why did the pay of CEOs decrease around the year 2000?
2001 was the time the dot-com bubble burst. CEOs and other highly ranked employees get most of their income from bonus payments, which are often tied to stock prices and revenues, and the like (which ...
- 4,120
4
votes
Is an "arms race" between wages and inflation inevitable?
As the 1muflon1 answer states the best argument you are already making is that single employer committing to such policy does not matter. This would not necessarily be true if every employer would try ...
- 649
3
votes
Accepted
Minimum Wage effects on Adjacent Cities
You should look at this county pairing methodology used by Dube, Lester and Reich (2010). http://escholarship.org/uc/item/86w5m90m
The abstract:
We use policy discontinuities at state borders to ...
- 76
3
votes
Accepted
Marginal productivity, wages, and profits in neoclassical economics
Recall the profit function.
$$\pi=pf(x)-wx$$
where $x$ is a set of inputs, and $w$ is a set of input prices.
A firm is profit maximizing when $MC=MR$ or in a competitive case where $MC=p$. If a ...
- 8,847
3
votes
Accepted
Can an overall improvement in technology make the owners of one factor worse off?
1x2 model
Consider a mode where production of a single good is given by a constant returns to scale CES production function:
$$Y=A(\alpha L^\rho +(1-\alpha)K^\rho)^{\frac{1}{\rho}}$$
where the ...
- 8,631
3
votes
How can median wages be significantly different in two neighboring countries with open borders?
As Tobias said, wages in general only adjust in neighboring regions if people move between the regions until expected utility (of working in either region) equalizes. If there is a (fixed) cost of ...
- 10.8k
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