RE: Help with a Minimum Wage Model

From: Lee Corbin (lcorbin@tsoft.com)
Date: Wed Apr 16 2003 - 20:40:03 MDT

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    Rafal replies to Matthew, who wrote

    > > the worker can be better off being barred from agreeing to
    > > sub-subsistence contracts. Kind of like what David Friedman talks
    > > about sometimes, early committment to later behavior which, at that
    > > later time, might seem irrational, can as a whole be rational.
    > > Foreclose your options yet become better off.
    >
    > ### Define sub-subsistence.
    >
    > If subsistence means survival without growth, then sub-subsistence is same
    > as starving. Something doesn't fit here.
    >
    > Barring contracts below a certain wage level will result in some transfer of
    > income to the workers,

    Can you enumerate some of the assumptions behind this statement?
    I don't know of any realistic ones, but enumerate them just the same
    if you would.

    Thanks,
    Lee

    > just like unionization of a factory, but at the cost
    > of reducing the flexibility of the system as a whole.
    > In the long run this rigid system will be less productiv
    > and prone to wild oscillations (strikes, bankruptcy),
    > harming financially all involved. Irrational in the
    > long run.
    >
    > Wage subsidies retain the flexibility of the market,
    > while still allowing one's "basic needs generosity"
    > to be expressed. Vastly superior to minimum wage laws.



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