Definition of Labour Economics
Labour is the totality of all human, physical and mental efforts used in creation of goods and services.
That is, it is the measure of work done (i.e. physical or mental) by human beings. From the above definition, it is clear that labour is an important factor of productive resources. Also, it is logical to
conclude that labour in economics is not just limited to physical effort but also mental activities which give rise to the creation of utility.
Therefore, in the field of economics, labour is classified into skilled, semi-skilled and unskilled labour.
Skilled Labour: It is a segment of the work force with a high skill level that creates significant economic value through the work performed. Skilled labour is characterised by advanced or formal education. Examples of skilled labour include medical doctors, engineers, scientists, lecturers, lawyers, etc.
Semi-Skilled labour: It is the part of the work force requiring less training than skilled labour, and more than unskilled labour. The labour requirement here is generally routine in nature and requires less skill or expertise. Examples include book binder, ironman, dyer, dry cleaner, etc. it can be added that semi-skilled labour stands in between the skilled labour and unskilled labour.
Unskilled labour: This requires operations that involve the performance of simple duties, which require little or no skill. This kind of labour requires physical exertion as well as familiarity with variety of articles. Examples include watchman, sweeper, cleaner, loader, messenger, etc.
Economics is concerned with maximization of resources (i.e. labour) to achieve maximum output.
Labour economics is defined as the branch of economics which studies how the market for labour operates, with a view to understanding the interactions between workers and employers. Labour
economics studies the nature and determinants of employment and compensation. There are three (3) key players in the Labour market: the workers, the firm and the government.
Labour economics basically looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment and income.
Below are some of the reasons for studying labour economics;
For virtually all households in the economy, the sale of their labour services constitutes their major source of income.
The price of the goods that they sell is the main determinant of their economic well being.
To understand the distribution of income in society─who earns what and why, we need to understand labour markets, and how wages are determined.
Like every commodity, labour has a number of special features/peculiarities that must be taken
into account in a more in-depth analysis.
Each of these features has important implications for how labour markets work and for prices and
quantities.
Labour economics helps to understand the result pattern of income, employment and wages by examining and analyzing wage distribution across industries.
It has helped us to gain a far better understanding of the factors affecting labour and labour market.
Labour Market
In a simple term, labour market is a market in which workers find paying work, employers find willing and able workers, and the wage rates are determined. Technically, labour market involves the interplay of the demand for labour and the supply of labour in the determination of the wage rate
Types of labour market
There are two types of labour market: internal and external labour market.
Internal labour market (ILM) refers to the determinants of pay and employment within a firm, while external labour market (ELM) refers to the determinants of pay and employment between firms, or within and across industries. Economists place emphasis on these distinctions in explaining how labour market works.
Posted by: Monday Desmond
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