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A Fundamental Externality in the Labour Market? Ragnar Frisch on the socially optimal amount of work

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  • Sandmo, Agnar

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

In the late 1940s, Ragnar Frisch published two articles in Norwegian that constitute a pioneering attempt to apply welfare economics to a problem of economic policy. The main contention of the articles is that there exists a fundamental externality in the labour market because the marginal productivity of labour depends both on input in the individual unit and on total labour use in the economy. While inspired by the problems of post‐war reconstruction, Frisch came to regard it as a general problem in a decentralized economy, and he explores its consequences for wage and tax policy. While Frisch attached great importance to the analysis, it has received little attention in the subsequent literature.

Suggested Citation

  • Sandmo, Agnar, 2017. "A Fundamental Externality in the Labour Market? Ragnar Frisch on the socially optimal amount of work," Discussion Paper Series in Economics 2/2018, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2018_002
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    References listed on IDEAS

    as
    1. Anonymous, 1949. "Economic and Social Council," International Organization, Cambridge University Press, vol. 3(4), pages 673-689, November.
    2. Agnar Sandmo, 1993. "Ragnar Frisch on the Optimal Diet," History of Political Economy, Duke University Press, vol. 25(2), pages 313-327, Summer.
    3. Francis M. Bator, 1958. "The Anatomy of Market Failure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 72(3), pages 351-379.
    4. Anonymous, 1949. "Economic and Social Council," International Organization, Cambridge University Press, vol. 3(2), pages 307-319, May.
    5. Olav Bjerkholt & Ariane Dupont, 2010. "Ragnar Frisch's Conception of Econometrics," History of Political Economy, Duke University Press, vol. 42(1), pages 21-73, Spring.
    6. Anonymous, 1949. "Economic and Social Council," International Organization, Cambridge University Press, vol. 3(3), pages 501-515, August.
    7. Anonymous, 1949. "Economic and Social Council," International Organization, Cambridge University Press, vol. 3(1), pages 114-129, February.
    8. John S. Chipman, 1970. "External Economies of Scale and Competitive Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 347-385.
    9. Ragnar Frisch, 1950. "Alfred Marshall's Theory of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(4), pages 495-524.
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    More about this item

    Keywords

    Welfare economics; Labour productivity;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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