What is labour economics/labor economics?
labour economics, study of the labour force as an element in the process of
production. The labour force comprises all those who work for gain, whether as
employees, employers, or as self-employed, and it includes the unemployed who are
seeking work. Labour economics involves the study of the factors affecting
the efficiency of these workers, their deployment between different industries and
occupations, and the determination of their pay. In developing models for the study of
these factors, this section deals with the labour force of contemporary industrialized
economies.
Labour economics, or labor economics, seeks to understand the functioning and
dynamics of the markets for wage labour. Labour is a commodity that is supplied by
labourers, usually in exchange for a wage paid by demanding firms. Because these
labourers exist as parts of a social, institutional, or political system, labour economics
must also account for social, cultural and political variables.
Labour markets or job markets function through the interaction of workers and
employers. Labour economics looks at the suppliers of labour services (workers) and
the demanders of labour services (employers), and attempts to understand the resulting
pattern of wages, employment, and income. These patterns exist because each
individual in the market is presumed to make rational choices based on the information
that they know regarding wage, desire to provide labour, and desire for leisure. Labour
markets are normally geographically bounded, but the rise of the internet has brought
about a 'planetary labour market' in some sectors.
Labour is a measure of the work done by human beings. It is conventionally contrasted
with other factors of production, such as land and capital. Some theories focus
on human capital, or entrepreneurship, (which refers to the skills that workers possess
and not necessarily the actual work that they produce). Labour is unique to study
because it is a special type of good that cannot be separated from the owner (i.e. the
work cannot be separated from the person who does it). A labour market is also
different from other markets in that workers are the suppliers and firms are the
demanders.
IMPORTANCE OF LABOUR ECONOMICS:
The study of labour economics is importance for the following reasons.
1. It helps economists to understand labour related problems e.g., Issues on fair wage
or salaries workers, welfare of workers, labour productivity, workers safety, gender
related matters, job security and Job satisfaction.
2. The study important in providing data for economic planning and policy e.g. It helps
economists to know the contribution of labour services to people’s income (wages and
salaries). There is evidence that in most economy, labour input is the most of economic
resources.
3. The study of labour economics helps us to understand the nature of the market in
which labour services are bought and sold.
What does labor economics do?
In economics, labor is the measure of work done. Workers supply labor as a
commodity, typically in exchange for wages from employers who have certain demands
to be met. Labor economics studies the effects of various factors of the market on the
labor force.
• Labor economics studies labor as a factor in the production/manufacturing process.
The labor force includes employees, employers, self-employed individuals, the
unemployed, and job seekers as part of the workforce.
• The study investigates how employment affects workers’ lives before, during, and after
they become workforce members.
• Labor markets may be geographically restricted within countries or regions or be
global. They work due to the interactions between employers and employees.
• Another area of focus for the concept is the mobility of workers within and between
these markets, as well as within and between different employers.
