Lump of labour argument

In economics, the lump of labour fallacy is the idea that there is a fixed amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. It was considered a fallacy in 1891 by economist David Frederick Schloss, who held that the amount of work is not fixed.

The term originated to rebut the idea that reducing the number of hours employees are allowed to labour during the working day would lead to a reduction in unemployment. The term is also commonly used to describe the belief that increasing labour productivity, immigration, or automation cause an increase in unemployment. Whereas some argue immigrants displace domestic workers, others believe this to be a fallacy by arguing that the number of jobs in the economy is not fixed and that immigration increases the size of the economy, thus creating more jobs.

The lump of labor fallacy is also known as the lump of jobs fallacy, fallacy of labour scarcity, fixed pie fallacy or the zero-sum fallacy – due to its ties to zero-sum games. Some economics studies have noted criticism and complexities with the fallacy claim.

The lump of labour fallacy has been applied to concerns around immigration and labour. Given a fixed availability of employment, the lump of labour position argues that allowing immigration of working-age people reduces the availability of work for native-born workers ("they are taking our jobs").

However, skilled immigrating workers can bring capabilities that are not available in the native workforce, for example in academic research or information technology. Additionally, immigrating workforces also create new jobs by expanding the economy and creating further jobs either directly by setting up businesses (therefore requiring local services or workforces), or indirectly by an increased population. As an example, a greater population that needs to buy more groceries will increase demand on shops and therefore require additional shop staff.

Advocates of restricting working hours regulation may assume that there is a fixed amount of work to be done within the economy. By reducing the amount that those who are already employed are allowed to work, the remaining amount will then accrue to the unemployed. This policy was adopted by the governments of Herbert Hoover in the United States and Lionel Jospin in France, in the 35-hour working week (though in France various exemptions to the law were granted by later centre-right governments).

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