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Labour supply

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An advertisement for labour from Sabah and Sarawak, seen in Jalan Petaling, Kuala Lumpur.
This backward bending supply curve of labour shows how the change in real wage rates affects the number of hours worked by employees.

In mainstream economic theories, the labour supply is the total hours (adjusted for intensity of effort) that workers wish to work at a given real wage rate. It is frequently represented graphically by a labour supply curve, which shows hypothetical wage rates plotted vertically and the amount of labour that an individual or group of individuals is willing to supply at that wage rate plotted horizontally.

Dynamics

Labour supply curves derive from the 'labour-leisure' trade-off. More hours worked earn higher incomes, but necessitate a cut in the amount of leisure that workers enjoy. Consequently, there are two effects on the amount of labour desired to be supplied due to a change in the real wage rate. As, for example, the real wage rate rises the opportunity cost of leisure increases. This tends to make workers supply more labour (the "substitution effect"). However, also as the real wage rate rises, workers earn a higher income for a given number of hours. If leisure is a normal good—the demand for it increases as income increases—this increase in income tends to make workers supply less labour so they can "spend" the higher income on leisure (the "income effect"). If the substitution effect is stronger than the income effect then the labour supply slopes upward.[1] If, beyond a certain wage rate, the income effect is stronger than the substitution effect, then the labour supply curve bends backward.

From a Marxist view, a labour supply is a core requirement in a capitalist society. To avoid labour shortage and ensure a labour supply, a large portion of the population must not possess sources of self-provisioning, which would let them be independent—and they must instead, to survive, be compelled to sell their labour for a subsistence wage.[2][3] In the pre-industrial economies wage labour was generally undertaken only by those with little or no land of their own.[4]

See also

Marxist theory:

Notes

  1. ^ Ehrenberg and Smith, "Modern Labor Economics", HarperCollins, 2008
  2. ^ Dobb (1947)
  3. ^ Harvey (1989)
  4. ^ Bowden p.18 quote: "Wage-earning is not a pursuit that is normally engaged for its own sake, and in a peasant economy it is followed only by men with little or no land of their own."

References

Bibliography

  • G. Arrighi (1970) Labour supplies in historical perspective: A study of the proletarianization of the African peasantry in Rhodesia Published in: Journal of Development Studies, Volume 6, Issue 3 April 1970, pages 197 - 234 doi:10.1080/00220387008421322
  • Peter J. Bakewell (1971) Silver Mining and Society in Colonial Mexico: Zacatecas, 1546-1700 Cambridge University Press pp. 124–5
  • Brooke Larson, William Roseberry (1998) Cochabamba, 1550-1900: Colonialism and Agrarian Transformation in Bolivia Published by Duke University Press, 1998 ISBN 0-8223-2088-6, ISBN 978-0-8223-2088-3 p. 55
  • Michael Cowen, Robert W. ShentonDoctrines of Development pp. 186, 312-3, 336
  • Douglass North (1990) Institutions, Institutional Change, and Economic Performance. Cambridge: Cambridge University Press
  • Robert Brenner (1976) Agrarian Class Structure and Economic Development in Pre-Industrial Europe, Past and Present 70: 30-75.
  • Brenner, Robert (1985) The Agrarian Roots of European Capitalism, in T. H. Aston and C. H. E. Philpin, eds, The Brenner Debate: Agrarian Class Structure and Economic Development in Pre-Industrial Europe. Cambridge: Cambridge University Press.
  • Ellen Meiksins Wood (2002) The Origins of Capitalism: A Longer View London: Verso

Journals

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