Labour Economics - An Introduction

Introduction

Labor economics shows the functioning and dynamics of the market with respect to wage labor. Labor market deals with the interaction and relation between the workers and the employers. This type of economics deals with all the aspects of the labor market. This market deals with the workers, the employers and tries to figure out the employment and income pattern. It deals with the pattern of the work done by the human beings and the benefits from which they should not be deprived of.

Demand for labor and wage economics

Demand for labor is not for personal sake but for the improvement of the business process and for the increase in profits. The demand for an increase in the amount of labor depends on the MRP (Marginal Revenue Product) and MC(Marginal Cost) of the worker. Wage difference occurs in mixed markets. For example, the wage of a doctor will be different from that of a port cleaner. This is due to the fact that the MRP of the doctor is more than that of the port cleaner. This is also related as the being a doctor needs lot of hard work and education while a port cleaner needs comparatively less training. The training for becoming a doctor is very expensive. Labor economics and wage economics also depend on the capital inflow in a particular business.

Macro & Micro analysis of labor markets

Labor market makes use of the application of micro economics and macroeconomics techniques. Microeconomic techniques refer to the role of private firms and individuals in the market. These individual firms employ labor and this refers to the micro economic model. The macroeconomic technique refers to the relation between the different levels of market which are goods market, labor market, money market, and the foreign trade market. The labor force includes all the working people who are working for any particular field and are 16 years and above. The macroeconomic techniques depend on various factors. Like the, participation rate, these refer to those number of people who are in the labor force who are adult but not institutionalized. The non-labor force who are not wanting or looking for any kind of work, these are people who are in prison, or children, or stay at home spouses. The unemployment level is referred to as the labor force minus the amount of people employed anywhere. The unemployment rate is described as the level of unemployment divided by labor force. The employment rate is divided by the people currently employed divided by the adult population.

Conclusion

Thus in the end it can be concluded that labor economics shows the pattern of the labor force and the wage laborers. It shows the macroeconomics and micro economics techniques of the market and how these are helpful.

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