Friday, June 30, 2006

Wages and Work Hours (and taxes)

Harvard University economics professor Greg Mankiw has a great blog to read. Today he points to a recent NBER study, which cites:

In 1983, the most poorly paid 20 percent of workers were more likely to put in long work hours than the top paid 20 percent. By 2002, the best-paid 20 percent were twice as likely to work long hours as the bottom 20 percent.

This is definetely one reason behind rising economic inequality in United States. The correlation (although the research doesnt provide a causual link) between worktime and pay is of course positive as "having the most productive people in our society working harder is a net gain for all of us" as states one of the commentators at the blog.

Also read other comments in the blog, especially one by mvpy, who proposes lower marginal tax rates as a motivator for the rich to work more. But at the end comes to the conclusion that:

If all these highly paid men and women are working such long hours, then, theyll possibly find partners at the workplace. This is pretty common. And this of course would lead to a surge in inequality among households.

Mainly, i just wanted to point out the blog as a great reading in general with 2-3 new post every day.

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