5.20 that they are entitled to 'parity' with another group, raay be ready to fight for it with sacrifices they would not otherwise dream of making. That seems irrational, but in a society where people judge themselves and others by how much they are paid, 'nfair' pay is a standing insult." ((A. Tylecote, op.cit. p.84.)) His relative earnings also affect the typical worker's morale and greatly influence his productivity whenever productivity is variable and depends on the worker's application and state of mind. That is generally the case in occupations that utilize not only the worker's muscle power but his skill, judgement, carefulness and sense of responsibility as well. Modern technology has greatly increased the demand for those qualities in the x^orker and so has greatly contributed to rendering the labor market more competitive. For an increasing amount of evidence shows that productivity depends very greatly on the worker's perception of how fairly he is treated and remunerated. That makes his output an increasing function of his wage, especially when that is below comparable workers' wages. Once his employer recognizes that fact, he not only finds himself facing a much more elastic supply curve of labor but becomes a price taker in all but name. In the United States at any rate, where the unionized sector is small, that seems to be the only way to explain the general rise in wages that appears to be very little influenced by differences in the availability of unemployed labor. I am now ready to deal with the Japanese exception, which is attributed to the special way in which they pay their ’workers.