# Tag Info

36

If you ask yourself how much a potential employer would have to pay you to convince you to work for him, the answer is probably something like "at least as much as I could earn by doing the same job for another employer". So, provided there are several employers competing to hire workers, you can think of employers as bidding against each other for the best ...

19

I find your question very interesting. 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 that it is not only the median but also the mean that stagnates: (I used family instead of household income because I ...

18

I suggest to learn more about the Economics of Superstars. Within the economics field, the "superstar" term is "...used to refer to extreme wage outliers (Adler, 1985; Rosen, 1981). These outliers are such that in a labor market there appears to be a convex relationship between wages and skills (Lucifora & Simmons, 2003). There are two main competing, ...

12

The answer to the question is yes, it is indeed meaningful (at least mathematically speaking). If you estimate the linear equation $$W = \beta_0 + \beta_1 PTR,$$ then $\beta_1=\frac{\partial W }{\partial PTR}$, meaning that $\beta_1$ represents the marginal change of $PTR$ over $W$. Now, if you estimate $$log(W) = \beta_0 + \beta_1 log(PTR),$$ then $\... 10 TL;DR Wages offset the high cost of living in most states. In NY and CA specifically, wages are insufficient to offset the high cost of living. In New York City specifically, wages do not even come close to offsetting the high cost of living. Having now researched this a bit, I can give a very concrete answer to the Lou/Nue hypothetical, and I think a ... 9 The reason you bring forward belongs to technological directed change, which is regarded one of the main explanations for wage growth differentials. Keep in mind it's not exactly the way you're phrasing it: The growth in tech companies rewards people who are skilled well for their kind of jobs (as opposed to "wealthy people"). Card and DiNardo have a nice ... 9 A bit dated, but here are Real Personal Income and Regional Price Parities for States and Metropolitan Areas, 2008–2012. The BEA takes per capita personal income by state and normalizes it by a cost of living index specific to that state. They find that New York and California are about 13 percent (119/106) more expensive than the country as a whole in ... 9 This is a common area of study in Development Economics. There is for example the Dual-sector model, first developed in 1954. It is very well explained in the link provided, but basically: [the] agricultural sector is typically characterized by low wages, an abundance of labour, and low productivity through a labour-intensive production process. In ... 8 Like people have said in the comments, log-log is commonly used. It amounts to estimating a constant elasticity model$Y = \alpha X^\beta$, which is a commonly used functional form within economics. Once you take logs, this becomes$\ln Y = \ln \alpha + \beta \ln X$. You can read more about this here. I guess your question is whether or not using this ... 8 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/h, the minimum wages remained at$4.25 in adjacent Pennsylvania. You should have a look at the subsequent research.

7

Alright, the other respondents have covered the logic behind a log-log regression pretty well, so I'm just going to add some practical tips. If you want to check whether your specification is reasonable, and your problem is the assumption of a constant elasticity, try splitting the sample into groups based on percentiles of $x$ and recalculating $\alpha$ and ...

6

We could distinguish between two kinds of "wage subsidies": A) The government pays to the firm part of the wage cost, usually social security fees. B) The government pays to the employee a markup on his wage. In scenario A, labor supply is not affected but labor demand shifts outwards: the tendency should be higher employment and higher equilibrium wage ...

6

I suppose that it depends on the time scale you are considering. Over the very long run the poor seem to have benefited far more than the rich from growth. See for example Robert J. Samuelson in the Washington Post: By 1915, the United States was the world’s richest nation — and yet, most Americans were dirt poor by today’s standards. Adjusted for ...

6

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 output requires preservation since it can't be immediately consumed as fresh product. So jobs are created in the "packaging" business-end of Agriculture, which ...

5

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 goods and services that these household incomes can buy? Should wages be increasing if a dollar can get more goods and services, thanks to technology? Many ...

5

The other answers already give a good explanation about how actors are not easily replaced. But I'd like to highlight a flaw in the premise of your question: namely that you are cherry-picking data. You cannot consider the median wage of actors/actresses without considering the entire cohort. You are only looking at the winners, if it were possible (and ...

5

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 intersubjectively verifiable). Please see below several methodologies for pricing the non-economical values such as happiness developed by economists: Willingness ...

5

One possible measure is "GDP (or productivity) per hour worked": OECD, EU28.

4

The other answers covered the main issues, I would like to respond to the "Edit" made by the OP in the question: Edit: One of my bigger fears is that I should have used a non-linear model to show the relationship. I feel that forcing both the dependent and independent variable to cooperate in a this linear regression is misleading in some way. We ...

4

They are both irreplacable and cause the people to work for to earn lots of money. Celebrities, by definition, are personalities with mass appeal and are therefore known by a large number of people. A certain portion of the people who know them will pay to see / hear them specifically (e.g. in a movie). Therefore they, through their agent, are well able to ...

4

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 productivity into its different components (see technical appendix, page 25). These components are three: Labour share: how much of total product (they use Net ...

4

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. The status of agricultural workers in society was little changed from a medieval serf. They lived in housing provided by their employer. Their employer ...

4

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 MacAskill's book Doing Good Better Did not find something strictly related to wages. For most of people, income may be a good proxy of wages.

4

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 - How many people are working on a specific task - How much capital is available to help the person perform the 1 hour of work 1 hour of work will depend on ...

3

I would say that your model in this case doesn't seem meaningful if your "goal was to see which variable most affected teacher salaries in any given county of my state". You have just shown what the correlation between (the logs of) wages and property tax returns is. You should at least use a multiple regression. Of course, you could keep going and develop ...

3

The first answer of presented in the list is wrong. GDP is measure of current production not of past inherited wealth. Even though the existing capital plays a part, the lowest of deprecation rate is around 25 years IIRC, so by and large the wealth is not inherited, but created by the generation. Advances in technology are usually assumed to spread all ...

3

Because you want to measure the real impact of education. If there is inflation, the nominal wages most likely will go up over time, but you don't want to think that your return to education does that, it's just inflation. If, on the other hand, you're comparing wage differentials, say $\log w_s - \log w_u$, where $s$ indicates skill and $u$ indicates ...

3

I have heard the claim that the economic growth benefits only the rich: they become richer while most people become poorer. Decomposing this for semantic meaning, this only holds water if you are equating wealth with "Social Position" instead of actual improvement of conditions. Assuming real wealth, certainly the Poor do not get poorer. They benefit by a ...

3

It seems that you answered your own question? If the government's estimation of inflation rates are not credible, how can the government effectively index to inflation? In any case, the first best solution to inflation in the long run is almost entirely an independent, competent central bank that has the capacity to raise interest rates, limit the money ...

3

The underlying reason are probably differences in labor productivity. Assuming decreasing marginal productivity of labor, the real question is why migration flows do not equate labor productivity and wages as would be predicted by simple GE models. I can think of several factors: Moving is costly Czech people in Germany are not as productive as Germans in ...

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