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Increasing the size of the workforce will tend to put downward pressure on wages. So if you double the workforce I expect you'd see pretty serious downward pre

by stoney 16y ago

Increasing the size of the workforce will tend to put downward pressure on wages. So if you double the workforce I expect you'd see pretty serious downward pressure on wages, maybe to the point where previously one partner working could support the family (historically the norm), but now you need both partners working. Though of course adding women to the workforce has had lots of positive effects, so maybe the overall improvement in the economy cancels out the downward pressure on wages. I am not an economist.

loewenskind 16y ago
Exactly right. Having both people working not only increases the work force, it increases peoples disposable income driving prices above what a single income can afford. I.e. either through downward wage pressure or upward price pressure, buying power goes down.
billybob 16y ago
"Increasing the size of the workforce will tend to put downward pressure on wages." I am also not an economist, but you're only covering the supply of workers. Do more workers = more money being spent = more products/services demanded = increased demand for workers? In other words, does it even out? I have read that wages have decreased in the last few generations while dual income houses became normal, but I don't know whether those are cause and effect or have common causes.
- amalcon 16y ago
  I'm not an economist either, but heuristically I'd expect the precise opposite to be true: the products/services with elastic demand curves (that is, luxuries) tend to require time to consume in addition to money. Simply having more money available will not necessarily increase demand for these things. If you wanted to make this argument, I think a better way to approach it would be from the supply side. The supply of goods and services should increase, because well, that's what workers produce. This should theoretically lower the prices of existing goods and services, because increased supply of a commodity puts downward pressure on pricing. That's all in theory. I highly doubt it's anywhere near that simple. The thing about macroeconomics is that it's somewhere between cargo cultism and ancient mythology: people compare situations that superficially resemble each other, and then invent models that explain several situations but are entirely untestable.

by stoney 16y ago

loewenskind 16y ago

Exactly right. Having both people working not only increases the work force, it increases peoples disposable income driving prices above what a single income can afford. I.e. either through downward wage pressure or upward price pressure, buying power goes down.

billybob 16y ago

"Increasing the size of the workforce will tend to put downward pressure on wages." I am also not an economist, but you're only covering the supply of workers. Do more workers = more money being spent = more products/services demanded = increased demand for workers? In other words, does it even out? I have read that wages have decreased in the last few generations while dual income houses became normal, but I don't know whether those are cause and effect or have common causes.

amalcon 16y ago
I'm not an economist either, but heuristically I'd expect the precise opposite to be true: the products/services with elastic demand curves (that is, luxuries) tend to require time to consume in addition to money. Simply having more money available will not necessarily increase demand for these things. If you wanted to make this argument, I think a better way to approach it would be from the supply side. The supply of goods and services should increase, because well, that's what workers produce. This should theoretically lower the prices of existing goods and services, because increased supply of a commodity puts downward pressure on pricing. That's all in theory. I highly doubt it's anywhere near that simple. The thing about macroeconomics is that it's somewhere between cargo cultism and ancient mythology: people compare situations that superficially resemble each other, and then invent models that explain several situations but are entirely untestable.