Why are all the shops so close to each other?

Gulnara keeps telling me that she needs to go shopping – but of course there is a nationwide quarantine so she’s stuck at home listening to me.

Although I feel some sympathy with her situation, I was worried that I will get dragged all around the place when we do go shopping in the future – and so we’ve gone online to look at Google Maps to figure out where we’ll need to walk. Having a look it appears we won’t have to walk around that far – as the clothing and perfume stores are all right next to each other.

So why is this?

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Where have the Boxing day sales gone?

Merry Christmas fine people!

So it is Christmas. How about this year I don’t:

Honestly, I used to do the same thing every year.

My way of precommiting to that was to time this post to go up on … Boxing Day! The presents are given, the inappropriate behaviour is done, and now we are ready to go shopping.

But those big sales back when I worked in retail appear to be largely gone. Why?

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RBA: Reserve Bank of Air New Zealand??

This article was originally posted at Interest.co.nz in 2013. The ideas are timeless 😉

Imagine being able to print your own currency.

Click a button, add a few zeros and voila you’ve increased the money supply.

The Reserve Bank can do it, and, believe it or not in a similar vein so too can Air New Zealand.

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Is the gym ripping me off: An Economic perspective

Last week I re-joined gym with Les Mills, as my previous fitness club (Revive) got shut down. The amenities provided and the corresponding higher price charged by Les Mills made two things come to mind:

  • Why are the prices different between these gyms?
  • Are they “extracting surplus” from me – in other words overcharging me?

To think about this, I want to talk about competition – specifically an idea called monopolistic competition.

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Monopsony employers paying higher wages?!

As part of my job as a researcher I like to read about different topics – I have done work on health economics, labour economics, and more recently firm level economics.  One topic that comes up across all these fields is the idea of a monopsony buyer for different things.

Looking across this blog I’ve seen monopsony discussed in terms of the labour market and in terms of migration and monetary policy.  However, I want to focus on concentration indices (as a proxy for monopsony) and wages.

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Monopsony in the NZ labour market?

As part of catching up with what has been happening in New Zealand I am reading what I can find from New Zealand economists.  In doing so I wandered onto this piece by Shamubeel Eaqub of Sense Partners.

Firms are finding it hard to recruit, as the pool of qualified job seekers who are not already employed is so small. … (But) Wages haven’t risen in tandem. Wages have been increasing in some sectors like construction, but have been stagnant in others. … One explanation for this may be a lack of competition in a local labour market.

The increase is from a low level and evidence from the US on minimum wages suggest such increases don’t cost jobs, but improve the incomes for the working poor.

So there are two claims embedded in this that I want to think about a bit here: Competition through monopsony and the efficacy of a higher minimum wage in the NZ context.

Is there suggestive signs of monopsony in NZ’s labour market (Tl;dr is YES and NO), does this imply minimum wages could increase employment (Tl;dr is YES if monopsony holds), does this suggest higher minimum wages would increase, or at least not reduce, employment (Tl;dr is probably NO at current levels).  Although we will be going through a bit more than this in what has turned into a long post.  Let’s do this.

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