marginal product of labour

A useful place to start is the economic theory of marginal product of labour.

'East Germany suffered from a low marginal product of labour after reunification.

Unless there is any redress to this distortion, the marginal products of labour will not be equal.

Hence the angle of the arrowhead measures the marginal product of labour.

But this concept of marginal product of labour breaks down at very high levels of pay.

In general, these mechanisms implicitly rely on the assumption of a perfect equality between the real wage and the marginal product of labour.

The scarcity of labour and abundance of land induced a high marginal product of labour.

These natural endowments included soil that was conducive to growing sugar and a high marginal product of labour realized through the increasing number of slaves.

A firm's labour demand is given by equating the cost of hiring an additional employee to the marginal product of labour.

It is clear that the slope of the tangent to the production function at this point is also equal to the marginal product of labour.

Models that assume perfect competition in the labour market, as discussed below, conclude that workers earn their marginal product of labour.

Profits can be maximised when the marginal product of labour equals the wage rate (marginal cost of production).

While the higher wage rate compensates the marginal worker for the lack of amenities in S, there is an equilibrium where the marginal products of labour are no longer equal.

"Managers of a capitalist enterprise are not content simply to respond to the dictates of the market by equating the wage to the value of the marginal product of labour.

The huge salaries of superstar executives "often seem to resemble prizes for the winners of contests rather than compensation in return for the value of the marginal product of labour."

The demand curve for labour shows the relationship between the real wage (equal to the value of the marginal product of labour in a competitive economy) and the demand for labour by employers.

The end result of this transition process is that the agricultural wage equals the manufacturing wage, the agricultural marginal product of labour equals the manufacturing marginal product of labour, and no further manufacturing sector enlargement takes place as workers no longer have a monetary incentive to transition.