Labour Market and Market Power

ENCYCLOPEDIA OF POLITICAL ECONOMY, Phillip O'Hara, ed., Routledge Publishing, pp. 643-645, 2000

Posted: 22 Jan 2010

Date Written: 2000

Abstract

The extent to which market conditions effects workers' abilities to influence their conditions of work, including wages, has been much considered by many economists in the last three centuries. The conventional economic view has been that conditions of work are largely determined by the forces of demand and supply. Under these conditions workers' power is only strong if the is a labour shortage. Therefore the introduction of minimum wage legislation and other unionisation of labour is considered to have net negative effects on the economy. However, empirical evidence suggests that minimum wage legislation and trade unions have not had the negative effects predicted. Recent work on efficiency wages and X-efficiency support the empirical evidence and suggest that improved working conditions improve productivity and hence workers can improve their working conditions without negatively impacting on the firm or the economy.

Keywords: Labour market, Wages, Work conditions, Bargaining, Demand, Supply, X-efficiency, Legislation

JEL Classification: J40, J22, J23

Suggested Citation

Altman, Morris, Labour Market and Market Power (2000). ENCYCLOPEDIA OF POLITICAL ECONOMY, Phillip O'Hara, ed., Routledge Publishing, pp. 643-645, 2000. Available at SSRN: https://ssrn.com/abstract=1539797

Morris Altman (Contact Author)

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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