Thursday, February 19, 2015

Greg Mankiw Misses the Point.

It is not about productivity slowdown or inequality increase, but both having the same underlying cause. When workers' wages have not proportionally increase with their productivity, they lose motivation to work harder, and that leads to both a drop in productivity and an increase in inequality. They are no longer getting equal pay for equal work, but equal pay for more work.Therefore, it is not which problem is bigger since there is only one problem.

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