4 ms·
By what mechanism does legally enforced transparency make the labor market more efficient?
by jstx1 4y ago
By what mechanism does legally enforced transparency make the labor market more efficient?
- loeg 4y agoIn general, pricing transparency increases market efficiency (and vice versa).
- woodruffw 4y agoPricing transparency eliminates economic triage and uncertainly: if you want to make $XXX, you don't have to apply to 10 different jobs and spend everyone's time determining whether they'll pay you $XXX.
- sokoloff 4y agoYou still don't know if they'll pay you $XXX. You only know that they claim that there exists some hypothetical employee to whom they'd in good faith imagine paying $XXX.
- joshuamorton 4y agoRanges have lower bounds. There is some subset of people for which this reduces the uncertainty to zero.
- lotsofpulp 4y agoBy the same mechanism that makes it work for commodities and public equity markets.
- sokoloff 4y agoUm, that mechanism is the printing of the actual trades and an open-outcry (now electronic) market-making process for definitionally fungible assets.
- joshuamorton 4y agoTransparency is literally one of the requirements for a theoretical efficient market. If buyers (companies) have asymmetrical information with sellers (laborers) there is room for inefficiency. Remove that and the market becomes more efficient. This efficiency is seen as higher wages and lower profits, as we see with the skyrocketing in executive compensation after it was legally mandated to be public.
- KoftaBob 4y agoOne of the criteria of a Perfectly Competitive Market is "Perfect Information": "In economics, perfect information (sometimes referred to as "no hidden information") is a feature of perfect competition. With perfect information in a market, all consumers and producers have complete and instantaneous knowledge of all market prices, their own utility, and own cost functions. "