Morning Must-Read: David Howell: Links Between Institutions and Shared Growth

If there were a thousand people all anxious to feed their families who had little in the way of alternative job prospects who could demonstrate that they could do my job well–well, then, it would be very difficult for my job to be a “decent” one, would it? It would still be a very interesting job. But it would also be a very low-paying job, unless I could figure out some way to extract a large share of the increasing-returns joint-production common pool and attach it to me in some durable way. And that requires that I figure out some way to block the others on my increasing-returns productive team from figuring out how to drive my wage down to the reservation wage of the unemployed guy now in Kerala who could do my job almost as well as I can.

David Howell is going to try to figure this out:

David Howell: The links between institutions and shared growth: “[Standard] arguments leave little or no room…

…for labor market institutions and public policies in the determining changes in the distribution of earnings up and down the income ladder. An alternative view is that institutionally-driven bargaining power is a critical piece of the story…. All rich countries face challenges from technology and globalization, but only the United States and the United Kingdom show inequality rising to extreme levels…. I will compare the United States with Canada, Australia, Germany, and France…. The United States can do a better job of generating decent jobs, and a sensible first step is to learn from the experiences of other countries.

February 25, 2015

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