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

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  • Eduardo Fernández-Huerga

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.

Suggested Citation

  • Eduardo Fernández-Huerga, 2019. "The Labour Demand of Firms: An Alternative Conception Based on the Capabilities Approach," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(1), pages 37-60.
    • Handle: RePEc:oup:cambje:v:43:y:2019:i:1:p:37-60.
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    File URL: http://hdl.handle.net/10.1093/cje/bey013
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