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We all know about the four factors of production: land (natural resources), labor (physical human effort), capital goods, and tech. And, most of us are aware of the fundamental definition of scarcity: When resources are free, their demand exceeds their availability. Well, some natural resources can arguably be encircled as scarce: since most of them are renewed over millions of years, but that's not the case with humans.

My thought:- Our procreation rate is great as relative to fossils, then, in what sense, does labor is regarded as scarce? Since labor also includes human capital (knowledge and skills-both physical and cognitive), I can agree that labor is indeed very scarce. For instance, if we imagine a world with free labor and Cena as an entrepreneur, he might want to hire 10 economists, but only 3 people in the town know about supply and demand, then his demand surely exceeds the labor availability. So, is labor scarce because human capital isn't limited? Or, there's something else I should know?

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Labor is scarce because there is a finite number of people willing to work at every given wage.

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Since labor also includes human capital (knowledge and skills-both physical and cognitive)

Human capital is actually considered by most economists separate factor. It is not simply included in L.

For instance, if we imagine a world with free labor and Cena as an entrepreneur, he might want to hire 10 economists, but only 3 people in the town know about supply and demand, then his demand surely exceeds the labor availability. So, is labor scarce because human capital isn't limited?

That would make those economists definitely scarce resource so you can consider human capital in that case scarce resources.

My thought:- Our procreation rate is great, then, in what sense, does labor is regarded as scarce?

  • Actually, this is empirically not true, human population is projected to collapse in developed countries in next 50-100 years because of terribly low birth rates, and there is little reason to think that as developing countries get richer they won't follow the same trend. Japan will probably have only 2/3 of current population by 2100 according to world in our data. Similar albeit bit slower trends hold in virtually all developed countries.

  • As you pointed out in your own question, for non-scarce resource supply exceeds demand even at zero price. If you check any wage site you will see that wages are currently non-zero, which indicates that this clearly is not the case currently. Of course, since you are looking only for labor you have to look at wages for low skill workers, but they are still non-zero in any country I can think off. So as things currently stand labor is scarce, and given the population projections it likely will only get more scarce in the future.

  • A thing to consider is that humans have agency. Humans typically experience disutility from work. So it is hard to imagine someone would willingly provide labor to the market at a rate that would not compensate the person for opportunity cost of leisure, meaning there should be some kink in labor supply where at a certain wage nobody is willing to voluntary supply any labor to the market.

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  • $\begingroup$ @1mulfon1:As you pointed out in your own question, for non-scarce resources supply exceeds demand even at zero price. If you check any wage site, you will see that wages are currently non-zero, indicating that this clearly is not the case." Well, I really didn't catch the drift here, wym exactly? $\endgroup$ May 21, 2023 at 6:55
  • $\begingroup$ @VinaySharma if supply and demand currently intersect in first quadrant (e.g. on Cartesian coordinates where q>0,p>0). Then since demand is typically downward sloping and supply upward sloping, if you hold everything else constant and just lower price, demand will have to outpace supply at p=0. For this to not happen you would have to have some weird non-typical demand or supply curves. So that is a strong indicator that as of now labor is scarce $\endgroup$
    – 1muflon1
    May 21, 2023 at 8:51
  • $\begingroup$ I'm not sure I would call bringing the population to where it was 50 years ago over a period of 100 years a collapse. The population growth of the 20th century was unnatural if you compare it to human history and the ecosystem is probably just balancing to a stable population. $\endgroup$
    – uberhaxed
    Jun 24, 2023 at 8:00
  • $\begingroup$ @uberhaxed 1. population collapse/decline is how it is called in academic sources so that is not me calling it that way that is official/academic way how the problem is referred to. 2. If you look into academic sources the reasons for this population decline are socio-economic (e.g. pension schemes that remove incentives for offspring, shift in cultural norm for women toward formal carrier with which children interfere etc) not ecological, so this is hardly an ecosystem somehow balancing itself, but rather results of socioeconomic pressures created by modern society. $\endgroup$
    – 1muflon1
    Jun 24, 2023 at 11:45
  • $\begingroup$ This is further corroborated by the fact that societies that are in one or other sense more removed from wider socioeconomic system e.g. Amish in US, in EU many orthodox Muslim communities, or orthodox Jewish communities with let's call them for a lack of better word 'traditional' micro-socioeconomic structures, have birth rates that are at or above replacement level... if it would be nature somehow balancing itself out it would be weird that it would target mostly non-religious, non-traditional (from social perspective) communities, I doubt that universe is somehow bigoted towards atheists $\endgroup$
    – 1muflon1
    Jun 24, 2023 at 11:57

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