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Jason Welker

Life on Severance: Comfort, Then Crisis - WSJ.com - 1 views

online.wsj.com/...SB125780714976639687.html

keynesianism wages recession sticky wages unemployment

shared by Jason Welker on 10 Nov 09 - Cached
  • The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, Mr. Joegriner, 44 years old, has had several offers. He's turned each down in hopes of landing a position comparable to what he held before.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Unemployed Americans unwilling to accept lower wage jobs! This sounds like evidence of the "sticky wages" Keynesian observed in his arguments for fiscal stimulus!
  • Mr. Joegriner is a member of what might be called the severance economy -- unemployed Americans who use severance pay and savings to maintain their lifestyles. Many lost their jobs in 2007 and 2008, and thought they'd soon find work. Now, they're getting desperate.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      I bet these people just wish they had taken that good offer a year ago. Finance people laid off during this recession must have an artificially inflated view of their own value in the labor market: over-inflated like the assets they had dealt in!
  • Last week, lawmakers passed a bill extending unemployment benefits up to 20 weeks. Unemployment benefits, which typically last about 26 weeks, were expected to run out for 1.3 million people by the end of the year, according to the National Employment Law Project.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Extending unemployment benefits, while it is a NICE thing to do, only increases the downwardly inflexible nature of wages.
  • ...3 more annotations...
  • The dramatic changes in such sectors mean that many of the eliminated jobs will never come back. Some workers may suffer a permanent hit to their standard of living.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Why won't certain jobs ever return to the US economy? Is it at least partially BECAUSE American workers are so unwilling to accept lower wages?
  • When Michelle Patterson was laid off as an executive director of marketing for a publishing company in January, she figured she could subsist comfortably, at least for a while, on the $20,000 she had reserved from her savings and severance combined.
  • She spent as much as $250 a week on networking meals and drinks with contacts. Some days, she scheduled up to four coffee meetings a day, picking up the tab most of the time. She also spent $30 a month for pedicures and $150 on her hair.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      You've got to be kidding me! This is what our world has come to. Unemployed Americans, delusional about their own worth, spending $180 a week on what, mani-pedis?
  • Jason Welker on 10 Nov 09
     
    Things are scary out there for the unemployed in America! This article tells some sad stories of opportunities lost and next eggs blown! It also illustrates a key concept from AP and IB Economics: the theory of sticky wages and prices, at the heart of Keynesian macroeconomics. 
Jason Welker

A Micro problem for the advanced Econ student | Welker's Wikinomics Blog - 5 views

welkerswikinomics.com/...-for-the-advanced-econ-student

microeconomics monopoly Mankiw

shared by Jason Welker on 09 Nov 09 - Cached
  • Jason Welker on 09 Nov 09
     
    I love that Harvard Economics professor Gregory Mankiw blogs, but I hate that has de-activated the comments on his blog. Yesterday he posted a question from his own Harvard introductory economics class.  Since he doesn't allow comments though, I cannot tell if I'm solving it correctly. So I will re-publish it here and ask my readers to solve the problem in the comment section. IB and AP students who have studied microeconomic should be able to put some of their basic algebra skills to work to solve this one.
  • ...2 more comments...
  • Molly Saso on 10 Nov 09
     
    I may be wrong, but initially profit maximizing P and Q are $7 and 3 at MC = MR with profit of $10.5. Subsequently at a world price of $6, domestic demand is 4 units, but the monopolist's profit maximizing Q becomes 5 units (at MC =P). Therefore he exports one unit and his profit becomes $9.5. Thus the answer is a bit unexpected. I am not sure, but if the world price is $7 then does he produce 6 units of which he exports 3 units, since domestic demand falls? That conclusion presumes that he acts as a perfect competitor in the world market, but probably he will find a way of gaining global monopoly power! Molly
  • gene hayward on 10 Nov 09
     
    I think I solved most of it...I look forward to the answer...:)
  • Jason Welker on 10 Nov 09
     
    Molly, could you explain how you determined that at a world price of $6, the firm's profit maximizing Q would become 5 units? Why did we equalize P=MC to find the firm's output at a price of 6? I see why the firm becomes an exporter at a world price of $6 if they produce 5 units (since domestic Qs exceeds domestic Qd) but just not why we determine the firm's output by P=MC. Thanks!
  • Molly Saso on 17 Nov 09
     
    I guess I am assuming that once there is free trade the monopolist has to act like a perfect competitor and at least in the world market is a price taker. It's a bit like the monopsonist who has to become a wage taker once there is an effective minimum wage. Consequently he employs more workers since his MFC equals the wage.
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