Marginal revenue productivity theory of wages information
Model of wage levels
The marginal revenue productivity theory of wages is a model of wage levels in which they set to match to the marginal revenue product of labor, (the value of the marginal product of labor), which is the increment to revenues caused by the increment to output produced by the last laborer employed. In a model, this is justified by an assumption that the firm is profit-maximizing and thus would employ labor only up to the point that marginal labor costs equal the marginal revenue generated for the firm.[1] This is a model of the neoclassical economics type.
The marginal revenue product () of a worker is equal to the product of the marginal product of labour () (the increment to output from an increment to labor used) and the marginal revenue () (the increment to sales revenue from an increment to output): . The theory states that workers will be hired up to the point when the marginal revenue product is equal to the wage rate. If the marginal revenue brought by the worker is less than the wage rate, then employing that laborer would cause a decrease in profit.
The idea that payments to factors of production equal their marginal productivity had been laid out by John Bates Clark and Knut Wicksell in simpler models. Much of the MRP theory stems from Wicksell's model.
^Daniel S. Hamermesh. 1986. The demand for labor in the long run. Handbook of Labor Economics (Orley Ashenfelter and Richard Layard, ed.) p. 429.
and 26 Related for: Marginal revenue productivity theory of wages information
negative. Marginal product of labor Marginal product of capital MarginalrevenueproductivitytheoryofwagesMarginal cost Production theory Average product...
(2017). Reframing the Labor Question: On MarginalProductivityTheory and the Labor Theoryof Property. Review of Economics and Economic Methodology, 2(1)...
equal to its marginal cost (P = MC). This implies that a factor's price equals the factor's marginalrevenue product. It allows for derivation of the supply...
efforts of management be paid their due.[disputed – discuss] David Ramsay Steele argues that marginalproductivitytheory renders Marx's theoryof exploitation...
Economic mobility Cycle of poverty Marginalrevenueproductivitytheoryofwages Wealth inequality in the United States List of countries by income equality...
relation between price, marginalrevenue, and price elasticity of demand. Anglo-Saxon model A school of thought based around low levels of regulation and taxation...
producer compares marginalrevenue (identical to price for the perfect competitor) against the marginal cost of a good, with marginal profit the difference...
market policy would. Under the classical theory, the wage rate is determined by the marginalproductivityof labour, and as many people are employed as...
labor theoryof value (LTV) is a theoryof value that argues that the exchange value of a good or service is determined by the total amount of "socially...
specifically for chapter 24 of the Internal Revenue Code: "For purposes of this chapter, the term “wages” means all remuneration (other than fees paid...
problems for theoriesof inflation. A firm's labour demand in the short run (D) and a horizontal supply curve (S) The marginalrevenue product of labour can...
discuss] Productivity increases do not always lead to increased wages, as can be seen in the United States, where the gap between productivity and wages has...
improve the investment climate, the small size of the domestic market, low wages, low demand for productivity enhancement tools, financial constraints, high...
Department produce its own plan. The 1986 act aimed to be revenue-neutral: while it reduced the top marginal rate, it also cleaned up the tax base by removing...
validity of neoclassical economics, with an emphasis on economic growth, capital, aggregate theory, and the marginalproductivitytheoryof distribution...
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to...
(sales revenue minus the cost of materials used up), and is cognate to English "more worth". It is a major concept in Karl Marx's critique of political...
left-hand side of this expression, R ′ ( L ) {\displaystyle R'(L)} , is the marginalrevenue product of labour (roughly, the extra revenue generated by...
theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics. One important purpose of the production function...
Alan (January 1999). "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain". Journal of Labor Economics. 17 (1): 1–22. doi:10...
marginal costs. The marginal benefit is the marginalrevenue product of labor or MRPL. The MRPL is the marginal product of labor (MPL) times marginal...
underconsumptionist approaches to wages, see Weintraub, Sidney (December 1956). "A Macroeconomic Approach to the TheoryofWages". The American Economic Review...
the result that a taxpayer's average tax rate is less than the person's marginal tax rate. The term can be applied to individual taxes or to a tax system...
Global Information
