The Labour Demand of Firms: An Alternative Conception Based on the Capabilities Approach

Eduardo Fernández-Huerga

Cambridge Journal of Economics, 2019, vol. 43, issue 1, 37-60

Abstract: The aim of this paper is to offer a theoretical framework for the analysis of labour demand alternative to the neoclassical one, taking as its starting point the conception of the firm that derives from the capabilities or competence-based theories of the organization. After briefly reviewing the essential elements of this approach to the firm, we tackle a range of diverse aspects, such as the link between labour demand decisions and the firm’s strategic planning and its determinants, the characterisation of labour demand as a demand for productive competencies, the consequences that these competencies are embedded in human beings or the relative independence between labour demand decision-making and the process of wage-setting. In general terms, this conception of labour demand allows us to incorporate many of the main peculiarities of labour and the demand for it from a number of different areas of heterodox economics (particularly, from institutional and post-Keynesian economics) and it fits in with the conventional literature on internal labour markets and labour market segmentation.

Keywords: Labour demand; Capabilities; Competencies; Institutional economics; Post-Keynesian economics (search for similar items in EconPapers)
Date: 2019
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