On the threshold of a more extended study of the competitive labour market must stand the problem of unemployment. What is the effect of unemployment on wages? How is it possible to reconcile the fact of unemployment with the simultaneous existence of rising wages? These are not the only new questions raised by the fact that the labour market of actuality is not in a state of equilibrium; but they are the most obvious questions, and we may conveniently begin by examining them.


Labour Market High Wage Lower Wage Regular Employment Building Operation 
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  1. 1.
    It is to the days before the growth of Trade Unionism to which we have to go for an inductive verification of these conclusions. It is thus interesting to read in Thornton’s celebrated essay on “ Paper Credit ” (1802): “A fall (in price) arising from temporary distress will be attended probably with no correspondent fall in the rate of wages; for the fall in price, and the distress, will be understood to be temporary, and the rate of wages, we know, is not so variable as the price of goods” (1st ed., p. 82).Google Scholar

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© J. R. Hicks 1963

Authors and Affiliations

  • J. R. Hicks
    • 1
  1. 1.University of OxfordUK

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