ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book sets out some of the most interesting and evocative developments in labour economic theory. It introduces the basic model of the labour market. The model rests upon three theoretical foundations: the marginal productivity theory of labour demand; the utility-maximising theory of individual labour supply; and the competitive theory of market equilibrium. Marginal productivity theory can be applied to the demand for any factor of production. It is a theory of derived demand. Though clearly the basic model represents a most severe abstraction from reality, it does provide some useful insights into the workings of the labour market. Two central interdependent themes in labour market analysis, as in every field of micro-economics, are technical efficiency and equity in resource allocation. The book focuses on various developments in labour theory.
