The Marginal Product Curve Is Not the Demand Curve for Labour and Lucas’s Labour Supply Function Is Not the Supply Curve for Labour in the Real World

Abstract

In attempting to explain their views about recent levels of unemployment in the United Kingdom, Messrs Maynard and Rose (1983) mistakenly argue that the marginal product of labour curve (hereafter MP L ) is the macro demand curve for labour in a Keynesian macroanalytical system. They claim that Brothwell (1982) has not comprehended that their analysis is based on a downward shifting labour demand (net marginal product) curve juxtaposed upon a constant labour supply (real wage) function. It is the shift of this labour demand function (and not the slope of the MP L curve) which they claim demonstrates an unambiguous decline in the demand price for labour.