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asked ago in General Economics Questions by (280 points)
I've identified a relationship where action on an independent variable DEFINITELY causes a directional response in an independent variable. Great! I can also show these are not 1:1, and therefor demonstrate that productivity growth slows down on current public policy and can be made roughly linear by corrected public policy. Can't actually give a method of quantitatively modeling this, though, so who cares?  The impact is "Big" but I can't tell you exactly how big.  Is that worth publishing?

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answered ago by (2.7k points)

I think that any way directed to increase productivity growth is worth. That's the engine that makes our lives better. So, go ahead.

Concerning two independent variables which are related to each other. Isn't there some kind of hidden dependence? If not they would be uncorrelated.
commented ago by (2.7k points)
Yes I see. But what I tried to say is that the profit margin is high overall for "customs" motive. So there is a magin for increasing wages and for reducing profit margin. If profits are the only expenditure including wages in an economy, if GDP increases there is no other cause for lower wages than the increase on profits. GDP increase due to productivity increases. Other cause could be more people working for less money what causes an overproduction because you produce more goods and the consumption is the same. I'm just trying to find a dependence between both variables. I think a mix of both cause could be the reason of the phenomena you discovered.

Kind regards Mr. Moser.
commented ago by (280 points)
Kind of. The profit margins stay low by lowering wages and prices together, and the profits increase by having more volume.  Price competition isn't about increasing volume, but REDUCING the volume of a competitor—in a microeconomic sense (note:  I have not studied microeconomics and may be abusing the term here), it's about drawing more buyers and more profit; but in a macroeconomic sense, for the given quantity demanded, drawing more buyers typically means people recognize Brand X costs more than Brand Y and defect from Brand X to Brand Y if their brand loyalty has less marginal utility than the difference in price.

This is sort of an arms race:  Brand X then reduces price—paying labor less is a good way to reduce cost, allowing such reduction.  The backstop is the minimum wage.

Another thing that happens is people want $20/hr, but at $20/hr it's cheaper to switch to a lower-labor method involving higher average wages—say, $18/hr.  So those laborers can be jobless or they can take $18/hr; if retraining to find a new career has a perceived cost of more than $2/hr, they'll just take lower wages.  Eventually the job becomes a minimum wage job, and laborers can't lower their wage prices, so they are replaced by the new, more-productive method; raising the minimum wage hurries this along, and the relationship I'm looking at is the ratio between that cut-off wage and the minimum wage, and how that ratio changes with the relationship between minimum wage and per-capita income.

I don't care about GDP here.  You can vastly increase GDP by  expanding the labor force and not increasing productivity.  GDP/C increases when your labor force participation rate increases OR productivity increases.  I'm interested in productivity, i.e. GDP/hr for each hour of labor.
commented ago by (2.7k points)
edited ago by
I think I see it crearly now. If GNI/C related to minimum wage increases,  consumption decreases and profits gets lower. So overall wages tend to decrease as same. If the minimum wage increases because of the high propensity of consume of those kinds of wages, profits tend to increase and the gap between GNI/C and minimum wage is reduced.
commented ago by (2.7k points)
Sorry I didn't read your last comment. Yes if you are talking just about productivity it's sure that minimum wage increases make the economy more productive because there is an incentive for buying more machinery.
commented ago by (2.7k points)
I hope not to be tiresome. Xiaomi profit margin is 9% and it is one of the cheapest trademarks in electronics. So other trademarks can have a margin of 20-25%. 80000 apple workers with a mean wage of 4000 dollars count for 40 dollars for product. Their phones cost 600 dollars. I think there is a margin for better wages, what increases productivity as you are pointing, decresing people needed for every production and increasing the number of firms capable of running with the same population. It increases profits and it is translated into better mean wages, which are necessary to consume a higher production. Sounds good.

Kind regards Mr. Moser.
PD : You can answer me if you want and I'll conclude our fun conversation. I hope your new work runs properly and you are able to publish it.