Lump of Labour Fallacy

Posted in Finance, Accounting and Economics Terms, Total Reads: 354
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Definition: Lump of Labour Fallacy

Lump of Labour Fallacy is a concept in economics which states that for an country the amount of work to be done by the people or the number of jobs available is constant. 


On the other hand, most of the economists today consider that the amount of work is not static but variable. Primarily, these economists contend that the employment of labour can increase the overall size of the economy, translating into further job creation. Decreasing the amount of labour employed would correspondingly reduce overall economic activity and thus further reduce the demand for labour. Similarly, those who are against automation are believed to be committing the same fallacy.


The term "lump of labour" was originated to refute the idea that decreasing the number of hours that employees are allowed to work would also decrease unemployment. The term has also been used to rebut the regular claims that increasing labour productivity and immigration decrease the number of jobs for domestic workers. As some claim that immigrants replace domestic workers, others contend it to be a fallacy, arguing that such a view depends on a belief that the amount of work in the economy is a zero sum game, whereas actually, immigration leads to the growth of the economy, thus generating more jobs.


For example, the famous France government’s initiative to reduce the regular working hours to 35 hours in a week in order to reduce unemployment in early 2000s.


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