Sometimes you wonder if economists ever step outside their lecture halls. Monopolies aren’t businesses, they’re a series of curves on a graph. Consumers aren’t people, they’re utility functions.
Not only do these models oversimplify and dehumanize, but they generally fail to hold up in real life. Look no further than David Card’s famous minimum wage paper, which illustrated that raising minimum wages actually increases employment in some sectors. This completely contradicted the theoretical status quo that raising wages should reduce employment.
The empirical application of economic theory to real markets is now almost ubiquitous among researchers. In this tradition, I interviewed Vanessa Vichit-Vadakan, a worker-owner at Cheese Board—everyone’s favorite Berkeley pizza place—to learn more about the real-world applications of labor models.
Read the rest at Berkeley Economic Review
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