Professor Thomas DiLorenzo discusses in his article “Do Capitalists Have Superior Bargaining Power?” labor unions and the perceived disadvantage of individual laborers in bargaining individually for wages. He argues that that is a common and incorrect perception saying:
“All employers want to pay the lowest price possible for the things they buy, such as labor services, and get the highest prices for the things they sell … But economic reality places limits on these pipe dreams. In labor markets, competition among entrepreneurs assures that there is a close association between worker compensation and the marginal productivity of labor … Workers therefore become more valuable to employers if their marginal productivity increases, which is caused by capital investment by employers (which makes labor more productive and hence more valuable), technological improvements, which are usually the result of employer investments in research and development, and improved human capital, which is
2007-11-26
15:16:44
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2 answers
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carriebryant2001
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Economics