ABSTRACT
Adam Smith and his followers, in effect, started their models of the supply of labor from models of population or fertility, the most famous of which is arguably credited to the Reverend Thomas Robert Malthus. The abstraction of the aggregate supply becomes more concrete as incentives draw workers from this supply to smaller constituencies: the supply to regions, industries, occupations, and firm. The demand for the factors of production is derived from the demand for products. Product price or marginal revenue is used to transform demand from product to dollar terms. The neoclassical model of factor demand is based on the marginal productivity of each particular factor of production. The labor market is the most important of all factor markets. Economists have long viewed education as what is now called an investment in human capital. There are two basic kinds of investments in human capital: one involves individuals investing in education; the other involves on the job training.
