Lump Of Labor Fallacy

DEFINITION of 'Lump Of Labor Fallacy'

The assumption that the quantity of labor required in an overall economy is fixed. This assumption in often regarded as fallacious, as the consensus view amongst economists today is that the quantity of labor demanded varies with respect to many factors. Foremost, these economists argue, employment of labor can expand the overall size of the economy, leading to further job creation. Reducing the amount of labor employed would decrease overall economic activity and thus further decrease the demand for labor.

BREAKING DOWN 'Lump Of Labor Fallacy'

The lump of labor fallacy originated to refute claims that reducing working hours would also reduce unemployment. As the reasoning goes, the remaining quantity of work would be left undone, and firms would be required to hire additional workers. The fallacy also has application to claims that immigration decreases the amount of jobs available for domestic workers. Controversy remains concerning whether the assumption of a fixed quantity of labor is actually contrary to the economic reality. Notably, the Government of France acted in 2000 to restrict regular working hours to 35 per week, in an attempt to alleviate unemployment.

RELATED TERMS
  1. International Labor Organization ...

    A United Nations agency that strives to serve as a uniting force ...
  2. Demand For Labor

    A concept that describes the amount of demand for labor that ...
  3. Organized Labor

    An association of workers united as a single, representative ...
  4. Labor Intensive

    A process or industry that requires a large amount of labor to ...
  5. Factors Of Production

    An economic term to describe the inputs that are used in the ...
  6. Cost-of-Living Adjustment - COLA

    An adjustment made to Social Security and Supplemental Security ...
Related Articles
  1. Economics

    How The Unemployment Rate Affects Everybody

    Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate.
  2. Economics

    The Economics Of Labor Mobility

    Loosening labor restrictions has both good and bad effects for a country and its workers.
  3. Economics

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  4. Forex Education

    The German ILO: Why It Matters To Traders

    Germany sets the standard and tone for business in Europe, which makes its economic releases a source of great interest to traders.
  5. Economics

    Unions: Do They Help Or Hurt Workers?

    Learn the pros and cons of these organizations and how they fit into today's economy.
  6. Wealth Management

    Blue Collar Vs. White Collar: Different Social Classes?

    Learn about the implications of the words "blue collar" and "white collar" and the connotation each carries for social class and the type of labor performed.
  7. Economics

    6 Signs That You’ve Made It To Middle Class

    A government task force pinpointed the six financial aspirations that characterize life in the middle class.
  8. Economics

    Understanding Income Inequality

    Income inequality refers to the uneven distribution of income across a single economy.
  9. Retirement

    Is Cohousing Right for You?

    Cohousing isn't for everyone. But if you're community-minded or committed to living green, it may be an ideal option for you.
  10. Retirement

    What is Cohousing and How Does it Work?

    Originally a Danish concept from the 1960s, modern cohousing communities can be found in the U.S., England and China. But how exactly do they work?
RELATED FAQS
  1. Is Russia a developed country?

    Though it once reigned alongside the United States as a world superpower, Russia is not classified as a developed country ... Read Full Answer >>
  2. Is North Korea a developed country?

    North Korea is one of the poorest and least developed countries in the world. It is far from a developed country. Because ... Read Full Answer >>
  3. Is Mexico a developed country?

    As of 2015, Mexico is not a developed country. However, it beats the majority of its peers in the developing world on most ... Read Full Answer >>
  4. Is Greece a developed country?

    Greece is a developed country by most meaningful metrics. However, its financial struggles have been well documented in the ... Read Full Answer >>
  5. Is Taiwan a developed country?

    As of 2015, the CIA World Factbook has yet to add Taiwan to its list of developed countries. However, many organizations, ... Read Full Answer >>
  6. Is South Korea a developed country?

    South Korea is widely regarded as a developed country. A few index providers still classify the country as developing, but ... Read Full Answer >>
Hot Definitions
  1. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  2. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  3. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  4. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
  5. Godfather Offer

    An irrefutable takeover offer made to a target company by an acquiring company. Typically, the acquisition price's premium ...
Trading Center