Wage and Value of work done According to the Holy Bible, our Lord Jesus Christ tells this story. For the kingdom of heaven is like a landowner who went out early in the morning to hire workers for his vineyard. He agreed to pay them a denarius for the day and sent them into his vineyard. â€œAbout nine in the morning he went out and saw others standing in the marketplace doing nothing. He told them, â€˜You also go and work in my vineyard, and I will pay you whatever is right.â€™ So they went. According to the parable, the landowner went out a couple more times later the day to recruit workers for the work in the vineyard. And so, â€œWhen evening came, the owner of the vineyard said to his foreman, â€˜Call the workers and pay them their wages, beginning with the last ones hired and going on to the first.â€™ As it happened, â€œThe workers who were hired about five in the afternoon came and each received a denarius. So seen this, those who were hired first expected to receive more. However, each one of them also received a denarius and began to grumble against the landowner. They protested why the workers hired last have been paid the same as them, even though they started early and had borne the burden of the work and the heat of the day. â€œBut the landowner answered one of them, â€˜I am not being unfair to you, friend. Didnâ€™t you agree to work for a denarius? Take your pay and go. I want to give the one who was hired last the same as I gave you. Donâ€™t I have the right to do what I want with my own money? Or are you envious because I am generous?â€™ â€œOk, this is the economistâ€™s interpretation. Apparently, to the workers who came early, the landowner seemed needlessly generous to the late comers. But it is really not about generosity but rather it is about fairness. It is about what is important to the landowner. The landowner will use any manner of incentives to get the job done. The landowner is just being fair. Apparently it was important to complete the work in the vineyard by night fall. So when the landowner saw that the work could not be completed with those he had hired earlier in the day, he decided to hire more hands late in the evening. To the landowner the workers hired in the evening where at least as important as those hired in the morning for the sake of the totality of getting the job done. The additional benefit to the landowner of each worker in this story was the same. Hence the wage had to be the same, because as far as an employer is concerned the wage paid to a worker should be equal to the value of his contribution. That is what economists call marginal revenue product. Our hidden economics for you.
Posted: Aug 31st, 2016 @ 03:01:45 AM