Brief von Fabio Petri an Kurt Rothschild

Petri, Fabio

4 Dear Professor Rothschild, I made the mistake of not immediately looking for you for a talk on your lecture on wage theory at Trieste: I went on thinking about it, and when I finally looked for you, you had just left. I had been greatly stimulated by a number of remarks you made in the course of that lecture, and I would have liked to ask for some clarification and some references. If you have a typed version of your lecture with references, or if you are writing it, please let me have a copy. Otherwise, I would be most grateful if you could spare a few minutes to answer the queries - essentially about references - which I would have liked to pose to you in Trieste. I would like to know more on the empirical work (by Thurow, if I understood correctly) on the validity of the marginal productivity theory of wages at the firm level. Could you give me the reference for it? Also, were there attempts to reconcile those findings with neoclassical theory (like Machlup with Lester)? But the points which interested me most were those where you seemed to question the legitimacy itself of speaking of well-defined supply and demand functions for labour. You stated that "perhaps there is no proper supply function for labour". Your allusion to women and to immigrants seemed to refer to the fact that some people move in and out of the workforce with job availability. Am I then correct in understanding that you meant that historically the supply of labour adapts to the demand for it, so that it has no independent existence? (A similar observation has been advanced by P. Garegnani in his contribution to the Festschrift Essays on Sraffa edited by K. Bharadwaj and B. Schefold.) Could you give me some references to works where this point is developed in detail? If I understood you correctly, this undermines the possibility of meaningfully speaking of a real wage determined by the equilibrium between supply and demand, because supply is not sufficiently independent of demand. Is this point generally accepted among labour economists? So all that is left is the possibility to say that the demand for labour, i.e. employment, is a decreasing function of the real wage, i.e. that a lower real wage would increase employment. But then your earlier criticisms of the demand curve become relevant: a) as argued by Joan Robinson, imperfect competition may mean that a higher real wage goes together with more employment (could you please give me ( 1!

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