> What my partner ends up with are the managers that cannot get a job in the better paying segment.
This observation is sort of downstream from the Baumol effect rather than the effect itself or more accurately when the effect is countered explicitly.
The core loop of the effect is when you need to pay a healthcare manager a ballpark similar salary when putting out a "for hire" ad to get applicants or alternatively hide the salary filter till much later in the interview sunk cost.
The problem is that you end up having the managers first apply for other jobs before getting to the low-paying job, so the initiators of the interaction (i.e "apply for jobs") sieve out before getting to the job that pays almost the same but needs less competence.
So you pay about as much, but get even less value for money than paying more.
When you put Baumol effect, Dutch Disease[1], Gale & Shapley[2] and the Market for Lemons[3] together, you get to see the job market from a lot of different angles in my immediate neighbourhood.
Silicon valley has a Dutch disease for math teachers for instance, but also the Baumol effect for the English staff. Not complaining about them, I'd like my kids to learn history, math and english from great teachers & don't want to do Kumon or whatever else the other kids are doing after school.
The way the schools try to fix it is by making the schools initiate hiring through temps and do extensive adjunct periods before any concept of tenure to work around the market for lemons (you can't hire a temp managing director, which is what's different there).
This really sucks for the good teachers who want to have a happy late 20s in the career they prefer.
This observation is sort of downstream from the Baumol effect rather than the effect itself or more accurately when the effect is countered explicitly.
The core loop of the effect is when you need to pay a healthcare manager a ballpark similar salary when putting out a "for hire" ad to get applicants or alternatively hide the salary filter till much later in the interview sunk cost.
The problem is that you end up having the managers first apply for other jobs before getting to the low-paying job, so the initiators of the interaction (i.e "apply for jobs") sieve out before getting to the job that pays almost the same but needs less competence.
So you pay about as much, but get even less value for money than paying more.
When you put Baumol effect, Dutch Disease[1], Gale & Shapley[2] and the Market for Lemons[3] together, you get to see the job market from a lot of different angles in my immediate neighbourhood.
Silicon valley has a Dutch disease for math teachers for instance, but also the Baumol effect for the English staff. Not complaining about them, I'd like my kids to learn history, math and english from great teachers & don't want to do Kumon or whatever else the other kids are doing after school.
The way the schools try to fix it is by making the schools initiate hiring through temps and do extensive adjunct periods before any concept of tenure to work around the market for lemons (you can't hire a temp managing director, which is what's different there).
This really sucks for the good teachers who want to have a happy late 20s in the career they prefer.
[1] - https://en.wikipedia.org/wiki/Dutch_disease [2] - https://www.jstor.org/stable/2312726?origin=crossref [3] - https://en.wikipedia.org/wiki/The_Market_for_Lemons