chapter  IV
19 Pages

Interbranch Pay Differentials and Self-Management

Becausealackoflabormobilitypreventsanefficientallocationof labor,Pareto'soptimumcannotbeachieved.Assumingasuboptimal allocationoflabor,itfollowsthat,ifaproperreallocationoflabor betweenfirmsweretotakeplace,thelevelofoutputcouldbe increased.Furthermore,amoreefficientallocationoflaborwould reduceinterfirmdifferentials.Onthispointinparticular,Wardwas probablythefirstinthelaborschooltouseneoclassicaltoolstoargue thatinterfirmdifferencesinincomeinYugoslaviaarearesultofan inefficientallocationoflabor.