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Yes, high skilled people produce more than they consume but that's of course a good thing. Look at it from the other way around. What would happen to the econo
by gizmo 14y ago
Yes, high skilled people produce more than they consume but that's of course a good thing.
Look at it from the other way around. What would happen to the economy if 50% of high skilled people moved to a different country? It would be disastrous for the country. So AS and AD go down as a direct consequence of those people leaving, but AD will also go down as a consequence of the resulting recession/depression. Importing high skilled people has the opposite effect.
So yes, high skilled workers add to AS and to AD, and the ratio of AS to AD won't change much because of that. But the economy will still get a boost (another increase in AD).
- yummyfajitas 14y agoI'm not a Keynesian, so I don't make arguments about AS/AD except in the context of "here is what the Keynesians believe". Looking at it the other way, if 50% of high skilled people moved to a different country, it would be a disaster. I just don't think it would be a Keynesian disaster. If anything, AD should hold constant while AS dropped, leading to an increase in employment. Note that I'm disputing your reasoning, not your conclusion.