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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