Lump of labour fallacy
Topic: Schools of Economic Thought and Economic Laws · NCERT: Beyond NCERT
Meaning
The lump of labour fallacy is the false belief that an economy has a fixed amount of work to share out. On that belief, more workers or more machines must take jobs away from others. In fact the amount of work is not fixed. New workers earn and spend, which creates demand for more goods and services. New machines raise output and lower costs, which opens up new industries and new jobs. Some particular workers can still lose out, but total work is not a fixed pie.
Example
The belief shows up in three common Indian debates. One is the fear that AI and automation will leave everyone jobless. Another is that migrants "steal" local jobs. The third is that raising the retirement age will cut jobs for the young. Each claim assumes that total work stays the same, and that assumption is the fallacy.
Don't confuse with
- Technological unemployment: this is the real loss of particular jobs when a new technology replaces workers. It does happen. The fallacy is the separate claim that total work shrinks for good.
Related concepts
- Baumol's cost disease
- Jevons paradox
- Goodhart's law
- Campbell's law
- Parkinson's law
- Broken window fallacy