Lump Of Labor Fallacy

AAA

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.

INVESTOPEDIA EXPLAINS '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. Structural Unemployment

    A longer-lasting form of unemployment caused by fundamental shifts ...
RELATED FAQS
  1. What caused the American Industrial Revolution?

    The initial vestiges of industrialization appeared in the United States in 1790, when Samuel Slater opened a British-style ... Read Full Answer >>
  2. Is industrialization good for the economy?

    Industrialization is the process by which an economy moves from primarily agrarian production to mass produced, technologically ... Read Full Answer >>
Related Articles
  1. Economics

    The Economics Of Labor Mobility

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

    The Unemployment Rate: Get Real

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

    Understanding Structural Unemployment

    Structural unemployment is an economic miss-match where workers fail to find jobs and employers with available jobs fail to find workers.
  7. Personal Finance

    Can A Family Survive On The U.S. Minimum Wage?

    As the political debate roars on, the numbers are clear: Even two full-timers at U.S. minimum wage can't keep a family of four above the poverty line.
  8. Budgeting

    5 Ways To Stretch Your Retirement Budget

    Living comfortably can be easy if you follow a simple plan.
  9. Economics

    What The National Debt Means To You

    The U.S. deficit seems to grow every year. But how does it actually affect you?
  10. Retirement

    Downsize Your Home To Downsize Expenses

    Learn how to cut your mortgage, tax, gas and utilities bills.

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center