Remix.run Logo
shkkmo 3 days ago

"provides upward pressure on wages" is true, but you simply can't get from there to actually demonstrating the "marginal producivity theory of wages".

It is pretty clear that the employment market suffers from severe inefficiency and information asymmetry. It takes a pretty bad economist to look at a market like that and think that its pricing is accurate.

Employees often don't know how much value they bring and thus are severly limited as counter party and other companies have a hard time predicting how much value you'll be able to add for the. These (plus many other factors) mean that you should expect significant mismatches between pay and performance.

Edit: None of this is evidence against performance being a paretor distribution (which makes sense to me), but we're gonna need more than just pay data to determine that.