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# Download Differential Subordinations - Theory and Applns by S. Miller, P. Mocanu PDF

By S. Miller, P. Mocanu

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Sample text

A larger emphasis is to 21 The Settittg for the Discussion be placed on the fact that competitive conditions permit higher pay at the top end of the list. Demand is more inelastic and wages tend to be a lower proportion of the sales revenue. But why do the firms pay more, simply because they can afford to do so ? If the union is brought into the explanation as a decisive factor, then an explanation can simply be made in terms of the union acting as a discriminating seller as among different industries.

The volume of imports would increase by 0·1 per cent, exports would decrease by 0·6 per cent, and their value by 0·3 per cent, while the balance of payment would deteriorate by 0·37 per cent of the value of imports. A decrease in employment of 0·37 per cent would be necessary to restore equilibrium. However, non-labour groups would try to increase prices more than wages, and thus the cut in employment might be larger (about 0·85 per cent). Professor Tinbergen's analysis is very stimulating, but only as a first approximation is the increase in the price level equal to the wage costs in product prices.

A decrease in employment of 0·37 per cent would be necessary to restore equilibrium. However, non-labour groups would try to increase prices more than wages, and thus the cut in employment might be larger (about 0·85 per cent). Professor Tinbergen's analysis is very stimulating, but only as a first approximation is the increase in the price level equal to the wage costs in product prices. Even if we do not consider the reaction of non-labour interests to the cut in the volume of output, 1 J. Tinbergen, 'The Significance of Wage Policy for Employment', International Economic Papers, 1 (1951), pp.