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ip26 3 days ago

There’s a “marriage problem” element not covered here. The marginal value of an employee is higher if the team they join is small. Eventually, the team reaches a size where more employees add little value. Most people understand this. However, it follows that the marginal productivity theory of wages gets more complicated. They might not be willing to pay you the full value they get from your work, for example, because they might suspect a replacement (e.g., keeping team size constant) would likely produce higher value. Or, they might pay you much closer to the full value of your work than others because they fear a replacement would likely bring lower value.