GDP undervalues government services

I. Gross domestic product can be calculated in many ways, but one of the most common is: (Government expenditure)+(Consumption)+(Investment)+((Exports)-(Imports)) To see why government expenditure is under-counted consider two countries, one of which provides all of its health care through the public sector, the other through the private sector. In the latter case, health care is … Continue reading GDP undervalues government services

The paradox of high expectations: The more you demand, the less you get

In various fairly common situations, demanding more can result in receiving less. I. The kinds of situation I am talking about are ubiquitous, but we'll start with employee hiring. Suppose you are running a job search, and are primarily interested in some desirable talent T. Perhaps T is years of experience using some application or … Continue reading The paradox of high expectations: The more you demand, the less you get

Yet another case in which minimum wage increases can raise employment

In a very simple supply and demand model the minimum wage increases unemployment. Yet there are many plausible models under which the minimum wage can actually increase employment, or have no effect on unemployment. This is fortunate because much of the empirical literature tends to suggest that the minimum wage as no effect, or only … Continue reading Yet another case in which minimum wage increases can raise employment

Explaining the non-effect of the minimum wage on employment: Could bosses screwing even themselves over by setting wages “irrationally” low be part of the explanation?

A substantial literature suggests that minimum wage increases have no negative effect on employment. The most popular explanation for this in economics is the theory that employers have monopsony power over their workers for a variety of reasons ranging from firm concentration¬†to the difficulty and uncertainty¬†navigating the job market and getting another job.¬† I have … Continue reading Explaining the non-effect of the minimum wage on employment: Could bosses screwing even themselves over by setting wages “irrationally” low be part of the explanation?