• Journal of Convergence Society for SMB
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• v.3 no.1
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• pp.7-13
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• 2013

It will prove that with a more plausible specification of the relationship between income and the value of leisure, we can develop a more accurate model of the labor market without necessarily losing the primary merit of the received model. Moreover, with an improved understanding of labor market dynamic we can see that progressive era labor market legislation, designed to mitigate the effects of bargaining power inequality in low wage labor markets, was in fact based upon sensible economic foundations. The results of this study as follow; These low-wage dynamics present an example of a positive feedback system or "vicious circle" at work in the economy. With the revised labor supply schedule presented above, the market dynamic of the low wage sector push the wage away from the range that is consistent with a self-regulating market.