The Theory of Wages

• labour demand as derived from the demand for output, such that for example a fall in the wage rate would lead to substitution away from other inputs and more labour use from increased production that the lower wage would facilitate
• the first statement of the economic concept of elasticity of substitution, a measure of the substitution effect posited above as to how much one factor of production would change to keep output constant in response to a change in relative factor prices
• the relation of this concept and its determinants to the distribution of
• technical change as biased or neutral, depending on how it affects the marginal product of one productive factor relative to that of another
• a macroeconomic hypothesis about induced innovation that " change in the relative prices of the factors of production is itself a spur to invention, and to invention of a particular kind—directed to economising the use of a factor which has become relatively expensive," including from one factor growing at a faster rate than another
• elements of employee-employer attachments in distinguishing regular and casual labour with an emphasis on expectations, imperfect information and uncertainty in the labour market
• the first-ever attempt to model a labour dispute that might end in a strike.

  Topical outline

• G.F. Shove, 1933. "The Theory of Wages. By J.R. Hicks," Economic Journal, 43, p -72.
• J.R. Hicks, 1935. "Wages and Interest: The Dynamic Problem," Economic Journal, 45, p -468.
• _____, 1936. "Distribution and Economic Progress: A Revised Version," Review of Economic Studies, 4, p -12.