| Author(s) | Ahmad Sulaiman Bin-Obaid |
| Affiliation | Assistant Professor, Economic Department., College of Administrative. Sciences, King Saud University, Riyadh, Saudi Arabia |
| Title | The Classical Labor Supply Curve: "Is Keynes' Critique of This Schedule Still Valid?" |
| Source | Journal of King Saud University. Administrative Sciences. Volume 12, No 1. (2000/1420) |
| Abstract | Abstract. The purpose of this study is to examine the validity of Keynes' argument: the real wage cannot be an appropriate measure of the marginal disutility of labor; i.e., to investigate whether an excess supply of labor (involuntary unemployment) exists as price level increases and /or as money wage becomes sticky downwards. This study was conducted by using simple tabulations of wages, prices, and unemployment rates data for seven industrialized nations during post WWII period. The empirical analysis of unemployment rates, price levels, and wages suggests that involuntary unemployment arises as price level increases and/or as money wage has become rigid downwards for the industrialized nations during post WWII period. This finding, therefore, confirms the validity of Keynes' criticism of the classical labor supply; that is, the real wage is not an accurate measure of the marginal disutility of labor. |
