Greg Mankiw recommends Edward Conard’s book, Unintended Consequences: Why Everything You’ve Been Told About the Economy Is Wrong, especially Figure 1-6 on page 22, which Mankiw finds “quite illuminating.”
Note the neoclassical assertion that “wages reflect productivity.” Therefore, in their view, median earnings for U.S. workers have stagnated not because wages have been kept low by employers but because the labor force has shifted to “demographics with lower productivity.”
This is part of Conard’s “brief history of the U.S. economy,” in which he seeks to deflect attention from Wall Street and inequality as possible causes of the financial crash (and thus to undermine calls to regulate financial institutions and to create a more equitable distribution of income) in order to show that financial innovation and economic inequality are in fact necessary conditions for successful innovation and increased productivity.
Wow. This one is incredible! Still what he has in the table is median income and the composition of the labor force. Where does he get that non-whites and females are less productive? I’ve seen nothing in the chapter available for free.
[...] Maybe it’s to justify Mankiw’s use of neoclassical economics to justify inequality (here, here, and here) in the face of our animal instincts of “inequity aversion” (as [...]