Question

1) Rising worker productivity means that more workers are demanded, other things being equal. When workers have access to better tools, they can produce more, and when they produce more, they become more valuable to their companies. If this works, then why do some people oppose technological progress, fearing that better technology will lead to less, not more, jobs being created?

2) Suppose that you have a choice between two options. Option A - you can study four years in the world’s best university, but you are not allowed to tell anyone that you have studied there. Option B - after 4 years of never once attending the world’s best university, you will get the diploma from this school and you can display it whenever and however you please. Which of these options would enhance your future earnings more and why?

Answer 1

1)

If workers are more productive, firms will demand more workers. However, firms will only look for the most productive workers. Firms will be willing to hire a few highly productive workers, than too many of unproductive workers. Productivity is never equal across workers.

After the most productive workers are hired, they are given the best tools and they are able to produce more.

Some people oppose technology as they are unable to match the higher productivity that the industry seeks. This brings about a sense of insecurity. In a productivity driven economy, firms will not accept unproductive workers.

Though better technology also means more jobs, these new jobs are high skilled jobs. This means that low skilled workers may actually lose their jobs, if they can't keep up. This leads to formation of unions and groups that oppose technology.

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2)

Option A will enhance future earnings in the long run.

Option B might enhance short run earnings, but the truth will be exposed in the form of inability of the person.

Here, it is assumed that the world's best university imparts superior knowledge and skills. Therefore, not attending university but displaying a fake degree, doesn't provide any such gains.

Long term earnings depend on the knowledge and skills of a person. These are assumed to have increased by attending the university.

In the option B, the person has not learnt anything, but is just claiming that he or she has attended a university. This might help in landing up the first job, but the person doesn't actually know anything about the job.