§1. Workers need training and education whose value often outlasts capital equipment. Investing in such education requires a long time horizon. Parents might be better equipped to evaluate such an investment than their children or employers.
§2. Parents often choose potential trades (and training) for their children based on current trends, conditions and wages. Such a view implies that future supply will be (mis)calibrated to past demand.
§3. That said, labor can and will switch between trades in direct proportion to workers’ ability to adapt skills to other work.
§4. Since labor skills are slow to change, it is not sure that they will be efficiently awarded for productivity or matched to demand at all times.
§5. The slow pace of change in labor supply means that workers will make excess profits when demand in their industry rises quickly but also face excess losses when demand flees.
§6. Ignoring wages, physical and mental stress will rise (fall) as demand for labor rises (falls).
§7. Although it may be tempting to describe the extra wages (or reduction in effort) to good workers as “rents” (see 6.1), Marshall describes them as “lucky” — in explicit contrast to the losses and extra work that “unlucky” workers face from be mismatched into a job or trade that they might have a hard time leaving for another.
This post is part of a series in the Marshall 2020 Project, i.e., an excuse for me to read Alfred Marshall’s Principles of Economics (1890 first edition/1920 eighth edition), which dominated economic thinking until Van Neumann and Morgenstern’s Theory of Games and Economic Behaviour (1944) and Samuelson’s Foundations of Economic Analysis (1946) pivoted economics from institutional induction to mathematical deduction.