Labour and Wages

Abstract

This chapter develops the first approach of Chapter 13 which looked particularly at the demand for a factor service under conditions of perfect competition. The analysis is now applied specifically to labour (particularly as regards the supply) and modifications are made to allow for immobility, imperfect competition, trade union influence and government policy. Note, however, that the basic explanation of the differences in wage-rates which exist between different occupations is still to be found in the marginal productivity theory. A wage-rate is higher in one line than in another because:

• (1) consumers put a greater value on the services of that type of labour.

• (2) the supply of that type of labour is less.