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In microeconomics, it’s a pretty foundational tenet that wages normalize to marginal worker productivity.
by dcolkitt 5y ago
In microeconomics, it’s a pretty foundational tenet that wages normalize to marginal worker productivity.
- HWR_14 5y agoI don't remember that from any of my microeconomic courses. I mean, maybe you mean society wide (aka macro), but that's only as average worker productivity rises, and has nothing to do with particularly efficient single firms.
- brutus1213 5y agoSimple thought experiment. Firms will continue to hire until wage = marginal productivity .. otherwise, you leave money on the table. Usual BS assumptions on perfect information/competition, cetrus paribus, and all that stuff.
- HWR_14 5y agoIn your simple thought experiment, why are wages going up for that one firm? You're hiring more people, not raising the wages of the existing people. And I'm not sure why you think unit economics apply to software with it's almost 100% fixed costs.