ABSTRACT
A given increase in the employment of labor, without any increase in the quantity of equipment in use, will obviously add less to output than it would if each newly employed worker could be provided with capital equipment that had previously lain idle. Thus, within the short period during which capital equipment and productive techniques are virtually unalterable, changes in output will be associated exclusively with changes in employment. If employment is not to fall as productivity increases, aggregate demand must grow enough to absorb the increasing output; in addition, the real wage may have to change so as to remain equal to the marginal product of labor. The increase in aggregate output, therefore, depends not only on the additional man-hours worked, but also on the distribution of demand among the commodities produced by those man-hours. As aggregate demand increases, bottlenecks appear in certain skill categories and geographical areas long before all the unemployed are taken up.
