Lump of Labor Theory of Wages

Discipline: Economics

In the short term, the demand for labor is fixed and employment can be created only by job-sharing and reducing existing working hours of workers.

Lump of labor theory of wages ignores the role of macroeconomic policy in stimulating the economy.

Source:
M Allais and O Hagen, eds, Expected Utility Hypotheses and the Allais Paradox (Dordrecht, 1974)

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