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What is "exploitation of labor?"

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economicrimpa | Student, Undergraduate | (Level 1) eNoter

Posted February 28, 2012 at 3:27 AM via web

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What is "exploitation of labor?"

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted February 28, 2012 at 3:34 AM (Answer #1)

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Since you have this tagged with "wage determination," I assume that you are not asking about the more general Marxist idea that laborers are exploited by the bourgeoisie.

In more technical terms, exploitation of labor is what occurs when an employer pays laborers less than their labor is worth.  In theory, this can only happen when an employer enjoys a monopsony.  When there is only one employer, workers must work for that employer at whatever wages the employer is willing to give.  If there were competition in the labor market, wages would be higher.  Because there is none, wages are set lower than they would be.

When there is such a difference between the value of a worker's labor and his/her wages, exploitation exists.

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