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Productivity is a price ceiling for labor. It only raises wages by allowing marginal producers come online and compete in the labor market. It could also reduce
by worker767424 5y ago
Productivity is a price ceiling for labor. It only raises wages by allowing marginal producers come online and compete in the labor market. It could also reduce the total demand for labor, so there's no reason to assume wages and productivity would stay linked. The correlation only makes sense in a first-order way: I produces twice as many widgets; "you should pay me twice as much." But that widget machine wasn't free, and it doesn't mean you'll sell twice as many.