Iron Law of Wages

Discipline: Economics

Iron law of wages has its roots in the work of classical economists, although the term was first used by German political economist FERDINAND LASSALLE (1825-1864). It postulates that wages will always revert to subsistence levels.

A rise in wages triggers an increase in the population, prompting a fall in wages back to subsistence levels. Also known as the subsistence theory of wages, this principle has no current relevance.

Also see: equilibrium theory

Source:
F J G Lassalle, Open Letter to the National Labor Association of Germany (Berlin, 1863)