Marginal product of labor

[1] It is a feature of the production function and depends on the amounts of physical capital and labor already in use.

In the short run, production can be varied only by changing the variable input.

At low production levels the APL tends to increase as additional labor is added.

Eventually the MPL reaches it maximum value at the point of diminishing returns.

The slope increases until the line reaches a point of tangency with the total product curve.

[9] Beyond this point the slope of the secants become progressively smaller as APL declines.

The falling MPL is due to the law of diminishing marginal returns.

The law states, "as units of one input are added (with all other inputs held constant) a point will be reached where the resulting additions to output will begin to decrease; that is marginal product will decline.

Under such circumstances diminishing marginal returns are inevitable at some level of production.

Diminishing returns occur when the marginal product of the variable input is negative.

That is when a unit increase in the variable input causes total product to fall.

In the aftermath of the marginal revolution in economics, a number of economists including John Bates Clark and Thomas Nixon Carver sought to derive an ethical theory of income distribution based on the idea that workers were morally entitled to receive a wage exactly equal to their marginal product.

In the 20th century, marginal productivity ethics found few supporters among economists, being criticised not only by egalitarians but by economists associated with the Chicago school such as Frank Knight (in The Ethics of Competition) and the Austrian School, such as Leland Yeager.

[13][failed verification] However, marginal productivity ethics were defended by George Stigler.

Marx characterizes the value of labor as a relationship between the person and things and how the perceived exchange of products is viewed socially.

[15] Alejandro Valle Baeza and Blanca Gloria Martínez González, Researchers compared productivity levels from countries that pay based on the marginal productivity and labor theory.