Document Type

Report

Publication Date

1976

Number

46

Abstract

Consider a labor market, or closely related set of such markets, in which a labor service is sold to buyers with differing characteristics, who combine it with other inputs to manufacture consumer's or producer's goods. We assume (and it is a crucial assumption) the service to be tied to, or embodied in, the buyers. We refer.to the service as an embodied labor service, to Indicate the Impossibility of resale. The question arises, how do suppliers distribute themselves among buyers? What factors determine trading with a larger number of demanders more extensively, as opposed to a smaller number more intensively? The problem bears a resemblance to Rlcardo's famous analysis of the cultivation of land, here, an individual buyer represents the Intensive margin, and the number of buyers a supplier deals with, the extensive margin, but the analogous issue remains, whether to trade more intensively or more extensively.