ECON 327 Labour Economics
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Labor economics is the study of labor as a factor in the production process. The labor force includes all people who work for benefits, be they employees, employers, or self-employed, as well as the unemployed who are looking for work. Labor economics includes the study of the factors affecting the efficiency of these workers, their distribution in various industries and professions, and the determination of their wages. In developing models to examine these factors, this section looks at the labor force in modern industrial economies.
Without considering psychology, social structure, culture, and government, economists cannot study the abilities, jobs, and incomes of men and women. In fact, the role of these forces in the world of work is often more significant than the market forces on which economics is focused. The most important reason is the special nature of labor as a commodity. Wage labor is different from hiring machines: it is a prerequisite for completing a job, but it is not enough. Employees must be motivated to work to acceptable standards and the contract is virtually indefinite. When employees are weak and easy to replace, this may not be a problem, but the more skilled, organized, and irreplaceable they are, the more they need to pay attention to creating an institutional environment that can enforce them and align with their concepts of fairness.
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