tag:blogger.com,1999:blog-4900303239154048192.post3329242925114355957..comments2024-03-06T06:34:42.881-05:00Comments on EconoSpeak: How to Think About Aggregate Labor MarketsUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4900303239154048192.post-4056437896310349282013-02-23T16:25:50.836-05:002013-02-23T16:25:50.836-05:00I think it's worth distinguishing between labo...I think it's worth distinguishing between labor market search models in which bargaining over net benefits usually leads to poor outcomes and search models, like Diamond's in which there are externalities and multiple equilibria. <br /><br />A bit more here: http://www.the-human-predicament.com/2013/02/stephen-williamson-does-not-sort-out.html<br /><br />Anonymoushttps://www.blogger.com/profile/11677815746117897839noreply@blogger.comtag:blogger.com,1999:blog-4900303239154048192.post-83808047938551301962013-02-21T11:06:01.302-05:002013-02-21T11:06:01.302-05:00This better articulates my problems with the curre...This better articulates my problems with the current S/D arguments vis-a-vis the labor market. Some argue the S/D analysis as though it is fungible across markets, which assumes equal bargaining power, ability to trim costs, and so forth. For instance, if a business wants to hire someone at $9, but that person wants to be hired at $10, who is in the better bargaining position. To answer that question, we need to look at the respective situations each are in. Presumably, a business can let that position sit idle, and either increase productivity through the rest of the workforce, or by reducing total output. An job seeker, meanwhile, short of being wealthy independent of that position, will have little choice but to accept that position--but will do so reluctantly. The worker has little to no bargaining power, and any attempts to unify that little bargaining power (unions) is being stripped away.<br /><br />What really bothers me about the arguments put forth by the Cowen's regarding S/D and the labor market is there is an assumption that businesses are paying employees based upon productivity. In other words, if a position sits idle, it will just cut output, or increase productivity through the rest of the workforce and increase their pay in some equal measure to what was offered to fill that idle position. But we have seen an overall stagnation of wages in the face rapidly rising productivity. If pay is redistributed within the firm either through a new position or to other workers because that is that the business can afford based on productivity, then we shouldn't be witnessing such a disparity between the two. Anonymousnoreply@blogger.com