Search

The increasing wage inequality in many countries is usually seen as brought about by economic forces that drive for economic efficiency within a changing technological and social environment. Ethical evaluations of these developments diverge, yet the view that free labor markets drive to efficiency remains undisputed. This note sets out to criticize, in a non-technical manner, this efficiency presumption which is based on Adam Smith’s theory of wage setting. It is urged that a Smithian wage structure would indeed be both efficient and fair. Yet modern labor markets work in ways that are fundamentally different to what was envisaged by Adam Smith. That makes the outcomes observed in modern labor markets, according to Smithian standards, both inefficient and unfair. As a consequence, the pursuit of the Smithian ideal requires organizational remedies, intervention and regulation in labor markets.

In der Öffentlichkeit wird oft die These vertreten, daß die zunehmende Ungleichheit der Lohneinkommen ökonomisch geboten, wenn auch gesellschaftspolitisch bedenklich sei. In diesem Beitrag wird gezeigt, daß die Lohnbildung in modernen Arbeitsmärkten nicht dem Prinzip der kompensierenden Differentiale folgt und damit zugleich ungerecht und ineffizient ist. Maßnahmen, die die Lohnspreizung eindämmen, fördern zugleich Effizienz und Gerechtigkeit., In German public discourse it is often argued that the increasing wage inequality we observe is economically required but may be problematic from a social point of view. It is urged here that wage formation in modern labor markets deviates systematically from what the principle of equalizing wage differentials would require. In this sense, it is both inefficient and unfair. Measures that curb wage dispersion increase both efficiency and fairness.