Lump of labour financial definition of lump of labour
lump of labour
Lump of Labor
The idea that the amount of work that can be done in an economy
is fixed. According to this idea, competition
for a job
is a zero-sum game
because there can only be so many possible jobs. Most economists
reject the lump of labor hypothesis.
lump of labour the proposition that there is only so much work to be done in the economy, so if fewer people are needed to produce any given output UNEMPLOYMENT must rise. It follows that labour-saving technological change will inevitably lead to higher unemployment. The proposition is fallacious for the following reasons:
- it assumes that the economy is already producing all the products society could possibly want, making no allowance for the fact that labour displaced in one area of the economy can now be redeployed to produce more goods and services elsewhere in the economy;
- technological advance creates its own demand - it leads to higher PRODUCTIVITY and the payment of higher wages, thereby increasing purchasing power in the economy, which in turn generates more output and employment.
References in periodicals archive
"I don't believe in that lump of labour
fallacy, we don't know all the jobs that are going to be there," he said in reference to robots versus human labour.
The idea that immigrants displace jobs is sometimes called the "lump of labour
fallacy", because it mistakenly assumes there is fixed amount of work to go around.
It is economically illiterate: it's the lump of labour