Quote:
Originally Posted by jimM47
In the particular discussion of macroeconomic theory at hand, the existence and meaning of "sticky wages" refers to something more fundamental and pervasive in labor relations than minimum wage laws, which mostly affect particular sectors.
Minimum wage laws are an additional thing that can make wages sticky in the downward direction, but sussing out their effect on the macroeconomy is a complicated empirical question that is beyond my ability to answer for you. It isn't simple multiplication because one sector's loss may be another sector's gain: what is bad for the restaurant industry and reduces employment therein may be good for the frozen dinner industry and increase employment therein.

Thanks. I did actually know that sticky wages and minimum wage requirements are two different issues. What amazes me is that anything about economics could be considered simple multiplication or division or addition or subtraction...although I know that the study of economics is composed of mathematical equations.
How do they know the mathematical equations are indeed correct or predictive in any way? BTW, that's just a rhetorical question.