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- Title
THE DEMAND FOR LABOR.
- Authors
Monroe, A. E.
- Abstract
The article develops a positive theory of the nature of the demand for labor. The appearance of another book accepting, and to some extent defending, the marginal productivity theory of wages is evidence of the continued vitality of this much debated doctrine. The first difficulty with the doctrine of marginal productivity is that it ignores one of the most important uses of investment funds. The only kind of investment, which can influence wages, is the efficiency-increasing kind that which increases the physical output of labor. If all savings went into the scarcity-reducing channels, productivity per laborer would be the same whether there were many laborers or few, much investment per laborer or none at all. The amount of savings devoted to efficiency-increasing investment, and therefore their marginal productivity and that of the labor combined with them, can not be known until the strength of the "pull" towards the other type of investment is known. This means that wages are influenced by a third factor, which is not included in, or suggested by, the marginal productivity formula.
- Subjects
LABOR demand; MARGINAL productivity; LABOR productivity; WAGES; INVESTMENTS; ECONOMICS
- Publication
Quarterly Journal of Economics, 1933, Vol 47, Issue 4, p627
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1884294