Real Wages and Unemployment with Effective and Notional Demand for Labor

Marc Lavoie

Review of Radical Political Economics, 2003, vol. 35, issue 2, 166-182

Abstract: The article presents the concepts of notional and effective demand for labor within the usual real wage and employment space. Its purpose is to compare various employment models within a single and familiar heuristic framework, taking into account both the profit maximization hypothesis and the effective demand principle. This framework retains the assumption of decreasing returns but adds the impact of income distribution on effective demand through consumption demand.

Date: 2003
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