Institutionalist Labor Market Theory and the Veblenian Dichotomy
The neoclassical approach to these twin concerns was forged by Alfred Marshall and subsequently refined by A. C. Pigou and J. R. Hicks. According to neoclassical theory, the operation of labor markets is simply derivative of general equilibrium theory. The labor market is portrayed as a price-auction mechanism or "bourse" wherein atomistic workers offer their services to competitive employers in return for a wage. The demand for labor reflects the labor input's marginal product, the relative prices between factor inputs and, most importantly, the