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Marginal productivity of people suffering from disguised unemployment is zero. Explain.

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Marginal productivity of people suffering from disguised unemployment is zero. Explain.

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  • In India the number of labourers i.e. the supply exceeds the demand. Even if some labourers are removed from agriculture the overall agricultural productivity will not be affected. Hence, rural areas experience disguised unemployment.
  • Even if few labourers are removed from agriculture there is no change in production. This means that the marginal productivity of these labourers is zero.
  • Hence, marginal productivity of people suffering from disguised unemployment is zero.
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