The Great Economists Joan Robinson1

Pigouvian tax

A tax that is imposed on the polluter to get them to internalize the social cost of their polluting activities

Monopsony

A market dominated by a single buyer. The difference from monopoly is that a seller controls a monopolized market, whereas monopsony is controlled by a monopsonist. Monopsonists are common in areas where they supply most or all of the region’s jobs

Labour supply elasticity

Measures the extent to which labour supply responds to a change in the wage rate in a given time period. If the elasticity is higher than 1, then the supply of labour is elastic, meaning that a small change in wages causes a large change in labour supply

Labour supply elasticity formula

If there are imperfections in both factors ….

(Labour) and product (for example rail) markets, then there are even greater potential rents

Wages also affect employment levels. If some groups have higher reservation wages, ….

That is, a wage level that tips them into deciding to enter the labour force or not, and accept a job or not, then there will be different employment levels too

Reservation wages

The smallest wage, at which a worker is willing to accept a job

If there is no perfect competition, which is highly likely, then workers will …, and firms will earn rents. Such exploitation of workers will persist until …. This market power enables firms to pay wages below what the workers produce. Robinson’s theories go beyond labour productivity and are related to the structure of markets.

Receive lower wages than they should based on their productivity … The market structure changes, and competition will lead firms to lose their market power

The Golden Age of Economic Growth

1950s’ - 1960s’

Why has this relationship between what firms … broken down

Can afford to pay workers and what they do pay

Another phenomenon that has contributed to low wages is the emergence of … .

Non-permanent or temporary workers

After the crash, Japanese companies were looking for short-term profits so they had to reduce labour costs. ….

Replacing full-time with non-regular workers was one solution

But it’s not only Japan …. There’s another factor that’s seen most acutely in the World’s biggest economy: automation.

That’s seen the rise of job insecurity, or only temporary workers that are a cause of low wages

The data from the last recession show why: more than half of jobs created since 2010 are low-wage. This process, which has been happening for over a quarter of a century, is known as the ….

Hollowing out of the middle class

In short, weaker worker bargaining power and technology have contributed to the shrinking middle class in America. Coupled with … in the US and elsewhere.

Globalization and the growth of part-time jobs, these factors help explain low wages

U-6 unemployment rate

Total unemployment plus all marginally attached workers plus total employed part-time for economic reasons, the most inclusive one

Robinson believed that

Addressing the short-run issues that workers face during monopolies exploiting periods is more important rather than waiting for the market to sort itself out in the long run

The misery of being exploited by capitalists

Is nothing compared to the misery of not being exploited at all