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The Neoclassical Model of the Labour Market

In: Labour

Author

Listed:
  • Jean Vercherand

    (INRA CESAER)

Abstract

According to the basic neoclassical model, the determination of the level of employment and the unit price of labour is dealt with as belonging to a perfectly competitive market, comparable to that of a consumer good. The only difference is that the roles of the agents are reversed. On the one hand, companies are suppliers on the market for goods and demanders on the labour market. On the other hand, households1 are demanders on the market for goods and suppliers (of their productive services) on the labour market. The wage rate (or equivalently, the unit wage; still more concretely, the hourly wage) and the volume of labour (the number of people employed multiplied by the duration of their work done at a given intensity, or work rates) result in the free confrontation of the global supply of, and demand for, labour. This confrontation is schematised in the form of a Saint Andrew’s cross on a plane where the horizontal axis measures the volume of work in hours while the vertical axis measures the wage rate. Each segment of the cross expresses the relation established between the volume of labour demanded or supplied and the wage rate (see Figure 2.1).

Suggested Citation

  • Jean Vercherand, 2014. "The Neoclassical Model of the Labour Market," Palgrave Macmillan Books, in: Labour, chapter 2, pages 53-74, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-37361-8_3
    DOI: 10.1057/9781137373618_3
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    Cited by:

    1. Jessica Scharf & Patricia Vu-Eickmann & Peter Angerer & Andreas Müller & Jürgen in der Schmitten & Adrian Loerbroks, 2022. "Work-Related Intervention Needs of Medical Assistants and How to Potentially Address Them according to Supervising General Practitioners: A Qualitative Study," IJERPH, MDPI, vol. 19(3), pages 1-17, January.
    2. Artur Sikora, 2021. "The minimum wage in Poland and its connection to unemployment: Evaluating causality," Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie / The Malopolska School of Economics in Tarnow Research Papers Collection, Malopolska School of Economics in Tarnow, vol. 50(2), pages 65-77, June.

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