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Chapter 19: Problem 10

The following data for 2015 are from the Organization for Economic Co- operation and Development (OECD). $$ \begin{array}{l|c|c} \hline & \begin{array}{c} \text { Average Annual } \\ \text { Hours Worked } \end{array} & \begin{array}{c} \text { Average } \\ \text { Annual Wages } \end{array} \\ \hline \text { Germany } & 1,371 & \$ 44,925 \\ \hline \text { United States } & 1,790 & \$ 58,714 \\ \hline \end{array} $$ The average German worker worked about 400 fewer hours per year and earned nearly \(\$ 14,000\) less than did the average worker in the United States. Can we conclude anything about the well-being of the average German worker versus the wellbeing of the average worker in the United States from these data? What other measures would you like to see in evaluating the well-being of workers in these two countries?

Short Answer

Expert verified
No, we can't conclusively say anything about the well-being of German and American workers merely from the data given on hours worked and wages earned. Well-being takes into account various other factors like cost and quality of living, health benefits, job security etc. To evaluate well-being in a comprehensive manner, numerous additional measures beyond earnings and work hours need to be considered.

Step by step solution

01

Observation

Observe the data. It's seen that the average German worker worked about 400 fewer hours and earned nearly $14,000 less annual wage than the average worker in the United States.
02

Simple comparison

From simple comparison, it might seem that the American worker is better off due to more earnings. However, this doesn't consider the standard of living, cost of necessities, work-life balance and other crucial factors affecting well-being.
03

Consider other factors

Well-being is not only determined by wages and working hours. Factors such as job security, quality of life, work environment, healthcare and benefits, vacation time, etc., also play an important role.
04

Infer the necessity of additional measures

For a more accurate assessment, additional data on factors such as cost of living, distribution of income, access to healthcare, educational and leisure opportunities, employment benefits, and social security measures in both countries would be helpful.

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Most popular questions from this chapter

Suppose Switzerland has many of its citizens temporarily working in other countries, and many of its firms have facilities in other countries. Furthermore, suppose relatively few citizens of foreign countries are working in Switzerland, and relatively few foreign firms have facilities in Switzerland. In these circumstances, which would you expect to be larger for Switzerland, GDP or GNP? Briefly explain.

Ireland is one of the few countries where GDP and GNP differ significantly. Using GDP per person, Ireland has the third-highest income per person in Europe. An article on the Financial Times website stated, "With GDP being about 20 percent larger than GNP, Irish people appear (when using GDP per person) to be richer than what they feel they are." Briefly explain the author's reasoning.

Assuming that inflation has occurred over time, what is the relationship between nominal GDP and real GDP in each of the following situations? a. In the years after the base year b. In the base year c. In the years before the base year

Michael Burda of Humboldt University in Germany and Daniel Hamermesh of the University of Texas examined how workers in the United States who lost their jobs spent their time. They discovered that during the period when the workers were unemployed, the decline in the number of hours of paid work they did was almost the same as the increase in the number of hours they devoted to household production. Do Burda and Hamermesh's findings allow us to draw any conclusions about whether total production in the economy-whether that production is included in GDP or not \(-\) decreased when these workers became unemployed? Does your answer depend on whether the household production they carried out while unemployed were activities, such as childcare, that the workers had been paying other people to perform before they lost their jobs? Briefly explain.

Describe the four major components of expenditures in GDP and write the equation that represents the relationship between GDP and the four expenditure components.
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