Pigou, Clark and Modern Economics: The Quality of the Workforce

Donald Stabile

Cambridge Journal of Economics, 1996, vol. 20, issue 3, 277-88

Abstract: Pigou and Clark investigated the relationships between wages and the quality of the workforce with their common but distinctive concept of social costs. Pigou found cases in labour markets where improvements in workforce quality had external benefits that increased GNP. Clark saw the social costs of labour as the overhead costs society had to pay to keep its workforce intact, and using a dynamic institutional theory, argued that those costs should be placed directly on business in terms of a guaranteed living wage. It is argued that modern economics has neglected any connection between wages and social costs by treating them separately and propounding a trade-off between equity and efficiency. As a result, they analyse cutting programmes in terms of their impact on competitiveness, and neglect how they can result in an inferior workforce. (c) 1996 Academic Press Limited. Copyright 1996 by Oxford University Press.

Date: 1996
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