Question

Respond to the following in a minimum of 175 words: Discuss at least two self-interested reasons that a top earner might favor policies to redistribute income. Discuss why the supply curve of labor for any specific occupation is likely to be upward-sloping, even if, for the economy as a whole, people work fewer hours when wage rates increase.

Answer 1

The top earners should logically favor policies to redistribute income as only when people have any income then only they can buy goods. Redistribution of income would raise the purchasing power of the economy as a whole. The major self interested motive can be higher profits. Top earners are basically business people and in business they need buyers who can demand their goods or services and consumer would demand only if they have the money in their pocket. This money shall be available when there is redistribution of Income. Another reason can be to keep their business going.

Upward sloping supply curve implies with higher wages labors prefer more work. Higher wages implies better factor remunerations and when one occupation provides higher wages people engaged in other occupations may shift towards it to enjoy the better rewards. For Example In India , during the period of late 90s and starting of 21st century, having an engineering degree from any institute brought large sum wages and so it became a trend among the people to pursue engineering during that time. People left other jobs to get a degree in engineering and enjoy a high paying job.