Re: (OPE-L) tendencies for equalization

From: Ian Wright (iwright@GMAIL.COM)
Date: Wed Sep 15 2004 - 18:03:25 EDT


Hi Jerry

Regarding tendencies to narrow the wage dispersion vs. the emprical
fact of wage inequalities.

This is one of those cases where the empirics are hugely
overdetermined (e.g., Howard's "avalanche" of causal process occurring
one on top of another). The factors you mention that generate wage
inequalities are efficacious. But it all depends on the level of
abstraction.

Even if the factors you mention were not efficacious, there are good
reasons to still expect pronounced income inequality. That's because
the economy is like a huge cocktail shaker in constant motion. It
never rests, and does not have a deterministic equilibrium. The income
distribution of the lower 90% or so of people can be fitted to
an exponential (there are other fits, but not important here). This is
the maximum entropy distribution under the constraint of money
conservation. In other words, the income distribution can be
considered the most disordely, most mixed up, distribution of income,
assuming only that money is conserved.

Only in simple mechanical systems with very few degrees of freedom
should we expect the empirics to be adequately characterised by
equilibrium values rather than equilibrium distributions.

So given that we lower our expectations about the empirics, we can
then ask whether the wage distribution in capitalism displays a
tendency to narrow. My guess is that it will stretch and contract
depending on all kinds of local contingencies, but will do so within
certain limits.

But at a higher level of abstraction I think the empirical data does
indicate a historical tendency for intra-class wage equalisation
amongst workers. The lower (predominately wage) end of the income
distribution is unimodal. It has a single peak. It is not multi-modal.
Why is it unimodal and not multi-modal?

If we sampled the heights of people that visited a web-site during a
month, then the histogram of heights would in all likelihood be
bimodal. That's because the population is split fifity-fifty into men
and women, and men are generally taller than women. The existence of a
bimodal distribution indicates the population can be split into two
types, and that members of each type share common properties that
affect the measured variable. In contrast, the existence of a unimodal
distribution indicates that the population cannot be sorted into
different types of significant statistical weight at this level of
abstraction.

I submit that if people were not qualitatively equal in their
productive capabilities then a part of the working population within a
single labour market would historically have been left behind. That
would manifest as a bi- or multi-modal income distribution,
representing a process of separation and breakdown of wage
homogenisation. But that is not what we find. Instead we find a
unimodal wage distribution.

The change in wages over time is like swarming behaviour: some get
ahead, some are at the back, but the swarm moves together and does not
split. The fact that it does not split requires an explanation.

Overlaid on the unimodality are the kind of factors you mention,
including wage inequality due to discrimination; the formation of
coalitions, such as unions; or the effect of political movements, such
as those Anders mentioned, which may more or less consciously reflect
the objective equality.

-Ian.


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