WHy is the money of the workers decreasing while the firms make profits due to globalization?

Why does increasing demand lead to better healthcare and higher wages?

DOnt you think that there are signifiicant oppurtunity cost to raising wages of employes, for the government and for firms? DOnt you think increasing education and research and thus productivity would be the better solution?

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Real income is the measurement of the quantity and quality of goods and services that a household possess. If average prices rise by 2% a year and incomes rise by 3% then the household can buy relatively more quantity of goods and services and thus will have more real income. An average household is better off in such a scenario as they can purchase more goods at a probably higher quality.

• How have trade and globalization contributed to rising real wages in America and Switzerland?

Trade and globalization have enabled multinational companies originating from America and Switzerland to establish their companies elsewhere where relatively cheaper foreign labor stimulates their production at lower production costs. Thus, multinational companies can provide goods and services for cheaper prices due to lower average costs. Furthermore, exchange rates contribute to lower prices. Moreover, trade has allowed goods that are produced more cheaply in other countries to be offered effectively in markets of America and Switzerland. Hence, the average household can purchase more goods and services with the same income as prices are cheaper. Thus, real wages have risen due to trade and globalization.

• How have trade and globalization contributed to falling nominal wages in America and Switzerland?

There is an opportunity cost to the positive effects of trade and globalization on nominal wages. Companies that leave America to produce where it is cheaper leave back unemployed labor and thus average wage rates are lowered. Additionally, trade makes some domestic companies in America and Switzerland uncompetitive to foreign companies and as a result these have to cut average costs by reducing labor and thus many people become unemployed as a consequence. As a result this unemployment the government may also raise income taxes to assure the well-being of the unemployed. Thus, there are lower nominal wage rates due to globalization and trade in Switzerland and America.

• How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?

Improvements in technology have made production much more productive. This is because with new methods of technology, production processes can be carried out much more easily and effectively. Thus as a result of increased productivity LARS shifts to the right as there is more potential output. Similarly healthcare and education make production processes more effective by increasing the productivity of labor. If Lars shifts, ceteris peribus, prices will be lower and real output will be higher. Thus consumers can buy more goods with the same amount of income. Hence, real wages are increased. Moreover, technology, education and healthcare decrease the average costs for producers. And thus prices will fall and real wages will rise

• What types of policies can government pursue to help raise the real wages of the nation’s workers?

The government may use supply side policies to shift LARS to the right and thus increase the level of real wages. This can be done in the long term by investing into healthcare, technology, education and research and development.

The government may choose to reduce taxes on nominal wages so that consumers may have more of their incomes left for consumption of goods, thus increasing their real wages.

Moreover, the government may consider establishing a minimum wage in the nation, which is constantly adjusted for inflation, a persistent increase in the general level of prices, so that when prices increase, then nominal wages and therefore real wages of the nation’s labor will also increase.

The government may also resort to other options. For example, imposing a combination of both supply-side and demand-side policies as well as deflationary fiscal, increase in taxes and lower government spending, and deflationary monetary policies, raise in interest and reduce the money supply, to reduce inflation. This will maintain an increase in the nation’s workforce’s wages and will therefore help raise the real wages, only if the rate of inflation is lower than the rate of the average increase in income. However, it’s not in the government’s favor to impose such policies, despite being quite effective, since it would displease the people/ the workforce which would lessen this government’s chances later, of being re-elected. Moreover, it would be very difficult for a government to reduce its spending as in the case of deflationary fiscal policies because of their commitment to the public.

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I agree with you in second question. As you said with globalization, workers may be able to get the jobs they want, they can be specialized in those jobs.

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In this situation, real income has increased. It means that the average household is better off because incomes rise more than prices. As a result purchasing power will be increased.

2. How have trade and globalization contributed to rising real wages in America and Switzerland?

By using the concept of globalization and opening trades and agreements to different parts of the worlds, so other countries would have benefit from this position like America and Switzerland. E.g. the countries can be able to buy the goods at cheaper price from other countries. Moreover, by opening the nation to the world, it gives the job opportunity for people.

3. How have trade and globalization contributed to falling nominal wages in America and Switzerland?

With the globalization the money that workers earn is decreasing, while the firm gains lots of profits.

4. How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?

Improvements in technology will increase production and it will lead to more demand. By this method, employees will have chance of having a high real wage. In health and education, this will also increase the demand It would lead to better health care and better education for the consumers.

5. What types of policies can government pursue to help raise the real wages of the nation’s workers?

Government can increase the real wages for the employees who worked for many years. Also, government may give more facilities for the workers who have worked in public or government companies.

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Real income will rise, with this increase average households can purchase more products or they can want to invest more. The purchasing power will be increased, it will be advatage for them.

2.How have trade and globalization contributed to rising real wages in America and Swizerland?

With the development in globalization and trade and adopting to that, workers are now able to get the jobs they want, they can be specialized in those jobs. So the countries will experience a rising real real wage. Countries will be able to obtain goods in cheaper prices.

3.How have trade and globalization contributed to falling nominal wages in America and Switzerland?

Employing foreigners become something possible and easy for US and Switzerland with the trade and globalization. So that competition increased and firms are forced to cheapen their wages, and that also cause the nominal wages of citizens to decrease.

4. How do improvments in technology contribute to rising real wages in both developed and developing economies? What about health and education?

With the developments in technology, there will be better facilities. However, there is also something about the technology and its unrealibility. Because if there is a problem with technology, life stops. For example, when electricity is gone in factories, the production will stop. Also, technology can take places of the workers in some cases (like business machines). On the other hand, technology is used in health and education which are two most significant things in a country, and will develop that society.

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The inflation is better in this particular situation.

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In this inflation case, average incomes show higher increase than average prices. That means more high quality goods can be buyed by the consumers.The result in this rise will be a result that is better for consumer. In real income there will be a rise because average households are able to invest more due to this case.

2. How have trade and globalization contributed to rising real wages in America and Swizerland?

Trade and globalization helped America and Swizerland. Workers are now able to find places where they can get more of what they wanted and they will be educated and specialized. The higher wages are the higher competition is felt. Moreover, America and Swizerland will construct companies to places offering cheaper workers and it is good for a company in terms of having more profit by giving less money to the workers. Their production is done at lower production cost. It will result like all consumers with wages can buy better quality goods; real income and real wages increase.

3. How have trade and globalization contributed to falling nominal wages in America and Switzerland?

Foreign workers need jobs and conditions are not important for them they just save the day and it doesn’t matter how low the wages are.And America and Swizerland accept this. However, current workers ; citizens are trying to have job against foreigners, whatever the wage is it is better than to be left unemployed. This situation causes citizens to work for a lower wage. So that nominal wages fall.

4. How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?

Extra money is earned by firms with advanced technology. Technology allows firms to be quick production. The more they produce the more they have profit. Also by technology, health will develop. For example in the time of Industrial revolution, number of deaths decreased and there was a big increase in population. This rapid increase was because of technology. It developed health. Diseases will be cured. Also education has benefits too. People can access to data and they will have opportunity to specialize. This accessing to data will make people to improve themselves in some areas and since they are good at their job, they will be chosen and paid higher wages. It will result as increase in nominal wage.

5. What types of policies can government pursue to help raise the real wages of the nation’s workers?

Government will focus on improving health and education. These policies will increase minimum wages and by this way government will invest more on health care and education. So that workers will be specialized at their work and work in company at their best performance.

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But won't increasing minimum wage eventually lead to greater inflation?

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Real income increases because it is rising faster than inflation. The average household is better off because they can buy more with their money.

2. How have trade and globalization contributed to rising real wages in America and Swizerland?

The economy is getting better, giving more people access to better quality products.

3. How have trade and globalization contributed to falling nominal wages in America and Switzerland?

Outsourcing jobs has hurt the workers in the US, slowing the growth of the average wages.

4. How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?

New technologies help lower costs which lowers prices and hence inflation. Better-educated people can get better jobs and make more money.

5. What types of policies can government pursue to help raise the real wages of the nation’s workers?

They can implement supply-side policies that increase the long run aggregate supply curve.

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You make a really good point in question number 5. Taxes and education are very important factors.

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For the 5th question I wasn't thinking like you until I read your answer. I think you are right all the things are on the hand of the government. If government can invest more money to education they will be helping to nation’s workers for the raise of the real wages.

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- Average income will increase so the real income will increase, too. In a such situation households will produce more product and as a result of this they will have more investment.

How have trade and globalization contributed to rising real wages in America and Switzerland?

- By the development of the technology robots which have the same abilities with humans took the place of the people in the factories. So this caused a competition between people. Because by this situation unemployement rate increased all around the world. Also robots can't to all the works that humans do, they don't have a brain like humans. As I said before this caused a competition between people. They have to have a lot of features for example educated etc. We can understand that workers became more qualified. Because of this in USA and Switzerland real wages increased.

How have trade and globalization contributed to falling nominal wages in America and Switzerland?

- Globalization gave a chance to foreign people to work in America and Switzerland. But foreign workers are paid less than the citizen workers. Because of this nominal wages decreased.

How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?

- By the development of the technology companies started to use more technological machines. This means they produce more in less time. For example before these technological developments a company was producing 10 shoes in 1 day but by the development of the technology they started to produce 100 shoes in a day. So this means more production more income. And more income means more wages for the workers. When we consider health by the development of the technology doctors started to find new techniques for some diseases such as cancer. This means doctor earns more money. We can give the same example for the education part. The teacher can find different methods for teaching.

What types of policies can government pursue to help raise the real wages of the nation’s workers?

- The most important thing that a government can do to raise the real wages of the nation's workers is decreasing the taxes. I think they also should decrease the cost of education, health etc. Because when people paid for these things they would pay most amount of his/her real wage.

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• globalization and trade was enabled by multinational companies which are originated from America and Switzerland in order to establish their companies where cheaper foreign labour presence their production at lower production cost. This means the more developed countries, the cheaper manufactured goods for consumption.

• the products can be cheaper but this comes at an opportunity cost. As ? mentioned in the previous question America and Switzerland multinationals produce in a different place in order to employ the workforce at cheaper wages, for their economic benefition. However, this induce much unemployment in their countries. If unepmloyed people accept the lower wages the unemployment in the long-term would be avoided.

• developments in technology gives opportunity for having better health and education services. The better education means the better labour so the nominal wages increases. Moreover, the use of technology in any sectors of an economy in both developed and developing countries increases overall efficiency, productivity, thus stimulating profits, GDP, raising wages, which further stimulate consumption, leading to rising real wages.

• governments can subsidies to education since it increases the knowledge of a workers in the long run. better education means qualified person so this person can get a high income job.

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Hey Özge you are very right by saying that technological developments create more opportunities to people about education and health. Also I really liked you opinions about policies that government can use to help raise the real wages.

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2)The USA and Switzerland are the developed countries so they want to minimize cost in economy. Because of that they produce their goods in other countries which have a potential to have workers working with little amount of wages. So these countries produce at minimum cost which brings them to sell these products at cheaper price as well. So people in the countries can buy these products easily which make their real wages rising.

3)As these developed countries produce at the outside and use the workers of other countries the unemployment rate is getting bigger in their own countries. As unemployment rises firms in that countries want to hire workers at very low wages and because of the big unemployment workers will accept this offer. This makes their economy worse which is the main reason of falling nominal wages.

4)As technology develops there will be more opportunities for people about jobs. For example for the help of new skill there can be new job sectors which make new job opportunities for people. Also as technology develops production costs will start to decrease and almost minimize which provides high wages as firms cost less than before. Also for education, technological developments increases wages so people can spend more money on education as their average income rises. Also because of technological development which also includes new developments in medicine, people can spend less amount of their money on health.

5)Government can subsidized education more as it directly helps a nation to be more educated which will contribute to economy in the long run positively. Also they can set up a minimum wage so that they can prevent reduction at maximum level. Maybe they could also motivate consumers to spend more on goods by using fiscal policy.

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