Question

Economists believe people should get paid according to the value of the output they produce. This is fairly easy to determine when you produce something physical, such as cupcakes. However, it becomes very difficult to measure if you are providing a service (perhaps teaching, or you're a doctor treating a medical condition).

Regardless of how you measure the value of the output, the more productive you are the more valuable you are in the market to potential employers. This is the reason many economists are against the minimum wage and are for programs that contribute to improving an employee's productivity (such as education and training). There is surprising agreement with just how important education is in minimizing income inequality among economists.

Given this information, what would you recommend to policy makers? What do you think about various school districts having vastly different access to resources around the state, or even the country? Recall, spending more money on education does have an opportunity cost - be sure to include that in your answer.

Your answer should demonstrate the knowledge you learned over the course of the semester. Most require 300-400 words to adequately express their ideas.

Answer 1

Solution

Yes,even me being an fan of economics,will support the economists when they say they are against the minimum wages.I believe that due to the concept of minimum wages :

1.There is incentive for induviduals to improve their productivity

2.There is no way to select the best ones if their productivity levels are not valued.

3.I think it develops the lack of interest to improve,laziness among the workers.

But the only advantage that it brings along with it is income equality.For Ex: In any country,the wages in some un-organized sectors of jobs,may be well below the average wages due to reasons like abundant supply of labor,nearly reduntant skillset,etc.,In that case people in those kind of jobs will suffer.So,in those cases,the govt. can implement this concept of minimum wages but along with encouraging themselves to re-skill.

I believe that education alone will not lead to reduction in inequality BUT education that includes practical exposure / industry exposure will help in improving the productivity which in turn will help in poverty reduction.

In other words,education is learning words in a dictionary,it is useful but only if it is used appropriately after learning them.Otherwise the time,effort and money spent on learning the same is useless.

So my recommendations to the policy makers :

- Is to implement minimum wages only in the reductant sector- purpose is to only suppport the livelihood of the exisiting people and help them in re-skilling / re-invent.

- In all the other sector it should implement a policy that will reward the individuals based on their productivity - This will lead to efficiencies improvement,innovations and cost reduction and so more profits and ultimately more value creation to all the stakeholders.

Yes as mentioned above education has opportunity cost associated with it - Time,money and effort.So, make sure that the value you derive from the education is more than the opportunity costs associated with it.