*****I think they should adopt Rawls’ idea of subsidizing firms as a device to make it worthwhile for firms to pay higher wages for their low-wage workers. If you give the workers $10 more per hour, but the government will cover 5 or 6 or 7 of those dollars, then your contribution is being leveraged by the contribution of the government. And then of course that will bring an increase in the number of people who want to work, and that's good for business. It would probably widen the economy and make the workplace a better place, which might also lead to a better rate of innovation.*****
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Perhaps I will go to the source to see if/how he addressed this question that popped to mind: "What mechanism might prevent firms from gaming the system? I imagine that, anticipating that salaries below a certain level would spur the government to leverage them with a subsidy to pay above that level, firms would find incentive to pay low.
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Another thought, perhaps related, is the role of employer-subsidized health insurance. One way of looking at is that it entraps workers who fear venturing into some other economic activity, such as entrepreneurship, because the cost and risk becomes too high.
Alternatively, "Medicare for All" (or the for-those-who-want-it variant) perhaps would give people more freedom. But perhaps at the same time it would operate as a kind of subsidy to employers, who no longer would bear this employment cost and perhaps would decline to pay higher wages. Which is perhaps is how it ought to be, employer-provided health insurance having come into being as a kind of fluke of historical circumstances.
And would Medicare for All, like UBI, arguably disincentivize work? Does it do so in other advanced countries with comprehensive, government-subsidized health insurance or even direct provision of care such as in the UK?
Thanks for reading, Eric! And you ask some good questions. I will pass them along to Prof. Phelps' assistant, if you don't mind. Personally I doubt whether Medicare for All would disincentivize work -- I don't think it has that effect in Europe and elsewhere -- but then again I'm not an economist.
Among others, I was intrigued by this passage:
*****I think they should adopt Rawls’ idea of subsidizing firms as a device to make it worthwhile for firms to pay higher wages for their low-wage workers. If you give the workers $10 more per hour, but the government will cover 5 or 6 or 7 of those dollars, then your contribution is being leveraged by the contribution of the government. And then of course that will bring an increase in the number of people who want to work, and that's good for business. It would probably widen the economy and make the workplace a better place, which might also lead to a better rate of innovation.*****
.
Perhaps I will go to the source to see if/how he addressed this question that popped to mind: "What mechanism might prevent firms from gaming the system? I imagine that, anticipating that salaries below a certain level would spur the government to leverage them with a subsidy to pay above that level, firms would find incentive to pay low.
.
Another thought, perhaps related, is the role of employer-subsidized health insurance. One way of looking at is that it entraps workers who fear venturing into some other economic activity, such as entrepreneurship, because the cost and risk becomes too high.
Alternatively, "Medicare for All" (or the for-those-who-want-it variant) perhaps would give people more freedom. But perhaps at the same time it would operate as a kind of subsidy to employers, who no longer would bear this employment cost and perhaps would decline to pay higher wages. Which is perhaps is how it ought to be, employer-provided health insurance having come into being as a kind of fluke of historical circumstances.
And would Medicare for All, like UBI, arguably disincentivize work? Does it do so in other advanced countries with comprehensive, government-subsidized health insurance or even direct provision of care such as in the UK?
Thanks for reading, Eric! And you ask some good questions. I will pass them along to Prof. Phelps' assistant, if you don't mind. Personally I doubt whether Medicare for All would disincentivize work -- I don't think it has that effect in Europe and elsewhere -- but then again I'm not an economist.