404PART SIXTHE ECONOMICS OF LABOR MARKETSimportant reason is technological progress: Scientists and engineers are constantlyfiguring out new and better ways of doing things. This has profound implicationsfor the labor market. Technological advance raises the marginal product of labor,which in turn increases the demand for labor. Such technological advance explainspersistently rising employment in face of rising wages: Even though wages (ad-justed for inflation) increased by 62 percent over these three decades, firmsnonetheless increased by 72 percent the number of workers they employed.The Supply of Other FactorsThe quantity available of one factor ofproduction can affect the marginal product of other factors. A fall in the supply ofladders, for instance, will reduce the marginal product of apple pickers and thusthe demand for apple pickers. We consider this linkage among the factors of pro-duction more fully later in the chapter.
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