Big Mac Economics

Princeton labour economist Orley Ashenfelter uses data from McDonald’s to study the economy. For him, Big Macs are a benchmark for comparing wages around the globe. This is from the Agenda with Steve Paikin, on Canadian public TV.

The take away from this discussion is that only increases in productivity can increase real wage rates. A worker at a McDonalds in India must work 3 hours to earn enough to buy a Big Mac while a McDonalds worker in the United States only needs to work 20 minutes to earn enough to buy a Big Mac.

The division into two sample periods, 2000-2007 and 2007-2011, shows how the big recession and the financial crisis devastated the economic prosperity of workers.

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