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Exchange, Competition, and the Division of Labor

In: Who Needs Jobs?

Author

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  • Pierre Lemieux

Abstract

Even if a new worker does not steal an existing job, as the lump-of-labor fallacy would have us believe, he may compete with workers who are already producing what he is now supplying. Consequently, the price of these goods will be pushed down. The impact will not be significant if only one newcomer lands in the labor market, but it will be if many do. Workers whose products now sell at lower prices will earn lower wages. The case is not so clear if the new workers produce a good or service that nobody was producing before—say, a smartphone. Yet their products may compete with older products—such as dumb phones—whose prices will be pushed down. On the other hand, the new workers will be pushing up the prices of the goods and services for which they bring a new demand on the market. They will therefore benefit some individuals and harm others. How can we be confident that the net effect is positive?

Suggested Citation

  • Pierre Lemieux, 2014. "Exchange, Competition, and the Division of Labor," Palgrave Macmillan Books, in: Who Needs Jobs?, chapter 0, pages 59-70, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-35351-1_6
    DOI: 10.1057/9781137353511_6
    as

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