macroeconomics

One Pay Gap Shrinks , Another one grows : A Reaction

Productivity pertains to the amount of output per unit of input such that labor productivity , for instance would refer to the amount of output per unit input of labor . Higher productivity means greater amount of outputs for a constant unit of input in a spectrum of time The aggregate productivity of the people is closely linked with national income because apparently income is the end result of the and services that people produce , which is represented in nominal terms as the gross national product

. Economic growth therefore is basically tied up to two principal factors (1 ) increase in inputs and (2 productivity . Both of which would naturally result in greater amounts of outputs

The article contends that the current increase in productivity among laborers (i .e . 30 ) is not that great compared to the era between 1947-1973 . It further argues that the productivity among women is better than those of men which it attributes to the increasing number of women with college education . Finally , it also argues that there is a gap between what the worker earns today and productivity . Thus , while the inequality of income difference between man and woman is narrowing the gap between rich and poor continues to widen . This means that the wealth generated by productivity growth was not equally shared by citizens . If the distribution of income would have been the same as in 1979 , a typical man would have an average income of 50 ,261 (42 ,261 8 ,000 ) while a woman would have an average income of 40 ,515 (32 ,515 8 ,000 . These stark findings are in contrast to the trickle down effect ' that the Reagan administration in the 1980 's have suggested And if this trend continues , the widening gap between the rich and the poor in the long run can lead to an economic imbalance and social conflict which may eventually create the circumstantial factors that lead revolution similar to that which eroded feudalism and aristocracy .While Wessel 's article recognizes the importance of education and training in improving productivity and better income as evinced by women , the article Economic Life After College ' by Frank Levy and Peter Temin of MIT further made an supported that a collage diploma does not ensure that one 's productivity is not at phase with productivity gains . Instead the top class in the social ladder continues to eat up the greatest chunk of the nation 's income , 21 .8 percent as of 2005 which is its biggest share since 1929

Under these premises , a call for more intense government redistributive intervention is needed to fairly close the gap between compensation of laborers and productivity as well as improve the fair share of workers in the nation 's wealth . The principal purpose of redistribution is to create a more egalitarian distribution of the wealth (generated by productivity of the labor class that constitutes approximately 80 of the population through an increase in their compensation plans...