How does the idea of a leaky bucket relate to the study of income distribution?
The idea is drawn from the writings of the late Arthur Okun, who used it to illustrate the trade-off between equality and efficiency. If we wish to transport water with a leaky bucket, some is lost. A small loss may be acceptable, but a larger loss may mean that we need a new bucket. By analogy, an income redistribution program that reduces inequality and entails a small loss of efficiency (GDP output and growth) may be acceptable. However, redistribution that has a large loss of efficiency will be unpopular and may not be wise.
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Which of the following is illegal in the United States?
A. Right-to-work laws B. Operating a closed shop C. Collecting bargaining D. Operating a union shop
A standard efficiency wage model pays workers higher wages in order to increase worker efficiency. As a result, firm profits increase and there is a pool of involuntarily unemployed workers. This equilibrium comes about in part because
A. workers are unaware of the pool of unemployed workers as long as they keep their job. B. workers will do anything to be paid a higher wage. C. workers are less likely to shirk when there is a pool of unemployed workers who are willing to take their job. D. the firm agrees to not replace labor with capital. E. the firm pays workers according to a tournament.