Business, Legal & Accounting Glossary
The marginal product of labor (or marginal product of labour in British English) is the additional value a new employee in a company adds. It is a function of the number of people a firm employs. A company with more capital and capacity will hire more employees. This is assuming they are hired in a competitive system, and being paid a fair wage.
It is subject to the law of diminishing returns.
The marginal product of labor can be expressed as: W = P * MPl W = wage l = ‘of labor’ P = price MP = marginal product
Classical economics would dictate that the labour market is fixed, in its own equilibrium, with the markets ruling. There is no welfare or subsidies. This is contrary to Keynesian economics.
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This glossary post was last updated: 28th March, 2020 | 0 Views.