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{{Economics sidebar}}
 
'''Labour economics''' seeks to understand the functioning and dynamics of the [[Market (economics)|market]]s for [[wage labour]]. '''Labour markets''' function through the interaction of workers and employers. Labour economics looks at the suppliers of labour services (workers), the demands of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income.
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==The macroeconomics of labour markets==
{{Unreferenced section|date=January 2014}}
 
[[File:Job Advertisement Board in Shenzhen -01.jpg|200px|thumb|right|Job advertisement board in [[Shenzhen]].]]
The [[labor force]] is defined as the number of people of [[working age]], who are either employed or actively looking for work. The '''participation rate''' is the number of people in the labour force divided by the size of the adult [[civilian noninstitutional population]] (or by the population of working age that is not [[Institutionalisation|institutionalised]]). The '''nonlabour force''' includes those who are not looking for work, those who are institutionalised such as in prisons or psychiatric wards, stay-at home spouses, children, and those serving in the military. The '''[[unemployment]] level''' is defined as the labour force minus the number of people currently employed. The '''unemployment rate''' is defined as the level of unemployment divided by the labour force. The '''employment rate''' is defined as the number of people currently employed divided by the adult population (or by the population of working age). In these [[statistics]], self-employed people are counted as employed.
 
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{{See also|Labour supply}}
[[File:Tompkins Square Park Central Knoll.jpg|thumb|right|The neoclassical model analyzes the trade-off between leisure hours and working hours]]
[[File:RAILROAD WORK CREW IMPROVES THE TRACKS AND BED OF THE ATCHISON, TOPEKA AND SANTA FE RAILROAD NEAR BELLEFONT, KANSAS... - NARA - 556012.jpg|thumb|right|Railroad work.]]
 
Households are suppliers of labour. In microeconomic theory, people are assumed to be rational and seeking to maximize their [[utility function]]. In the labour market model, their utility function expresses trade-offs in preference between leisure time and income from time used for labour. However, they are constrained by the hours available to them.
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{{Unreliable sources|date=January 2014}}
At the micro level, one sub-discipline eliciting increased attention in recent decades is analysis of [[Internal labor market|internal labour market]]s, that is, ''within'' firms (or other organisations), studied in [[personnel economics]] from the perspective of [[personnel management]]. By contrast, external labour markets "imply that workers move somewhat fluidly between firms and wages are determined by some aggregate process where firms do not have significant discretion over wage setting."<ref>• [[Edward P. Lazear]] and Paul Oyer, 2004. "Internal and External Labor Markets: A Personnel Economics Approach," ''Labour Economics'', 11(5), pp. 527 and 528. [Pp. [http://faculty-gsb.stanford.edu/oyer/wp/ports.pdf 527–554].]<br/>&nbsp;&nbsp; • [http://www.aeaweb.org/jel/guide/jel.php?class=M JEL Classification Codes Guide: M] per JEL:M5].{{Unreliable source?|date=January 2014}}</ref> The focus is on "how firms establish, maintain, and end employment relationships and on how firms provide incentives to employees," including models and empirical work on incentive systems and as constrained by [[economic efficiency]] and risk/incentive tradeoffs relating to personnel compensation.<ref>Paul Oyer and Scott Schaefer, 2011. "Personnel Economics: Hiring and Incentives," ch. 20, ''Handbook of Labor Economics'', v. 4B, pp. 1769–1823. [http://www.sciencedirect.com/science/article/pii/S016972181102418X Abstract] and pre-pub [http://www.utah-wbec.org/~schaefer/Research/schaefer_hiring01.pdf PDF].{{Unreliable source?|date=January 2014}}</ref>
 
==Criticisms==
Many sociologists, political economists, and [[heterodox economics|heterodox economists]] claim that labour economics tends to lose sight of the complexity of individual employment decisions.{{Citation needed|date=May 2009}} These decisions, particularly on the supply side, are often loaded with considerable [[emotional baggage]] and a purely numerical analysis can miss important dimensions of the process, such as social benefits of a high income or wage rate regardless of the marginal utility from increased consumption or specific economic goals.
 
From the perspective of [[mainstream economics]], neoclassical models are not meant to serve as a full description of the psychological and subjective factors that go into a given individual's employment relations, but as a useful approximation of human behavior in the aggregate, which can be fleshed out further by the use of concepts such as [[information asymmetry]], [[transaction costs]], [[contract theory]] etc.
 
Also missing from most labour market analyses is the role of [[feminist economics#Unpaid work|unpaid labour]]. Even though this type of labour is unpaid it can nevertheless play an important part in society. The most dramatic example is child raising. However, over the past 25 years an increasing literature, usually designated as the [[Family economics|economics of the family]], has sought to study within household decision making, including joint labour supply, fertility, child raising, as well as other areas of what is generally referred to as [[home production]].<ref>(Sandiaga S. Unno, Anindya N Bakrie, Rosan Perkasa, Morendy Octora : The Young Strategic Renaissance's In Asia)
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===Wage slavery===
{{main|Wage slavery}}
{{further|Economic exploitation|Contemporary slavery}}
 
The labour market, as institutionalised under today's market economic systems, has been criticised,<ref>{{Harvnb|Ellerman|1992}}.</ref> especially by both mainstream [[Socialism|socialists]] and [[anarcho-syndicalism|anarcho-syndicalists]],<ref name="English Working Class p. 599">{{Harvnb|Thompson|1966|p=599}}.</ref><ref name="English Working Class p. 912">{{Harvnb|Thompson|1966|p=912}}.</ref><ref name="Geoffrey Ostergaard p. 133">{{Harvnb|Ostergaard|1997|p=133}}.</ref><ref name="Shop Floor p. 37">{{Harvnb|Lazonick|1990|p=37}}.</ref> who utilise the term [[wage slavery]]<ref name="merriam-webster.com">{{Cite web |title= wage slave |url= http://www.merriam-webster.com/dictionary/wage%20slave |publisher= [[Merriam Webster|merriam-webster.com]] |accessdate= 4 March 2013 }}</ref><ref>{{Cite web |title= wage slave |url= http://dictionary.reference.com/browse/wage%20slave |publisher= [[dictionary.com]] |accessdate= 4 March 2013 }}</ref> as a [[pejorative]] for [[wage labour]]. Socialists draw parallels between the trade of labour as a commodity and [[slavery]]. [[Cicero]] is also known to have suggested such parallels.<ref>"...vulgar are the means of livelihood of all hired workmen whom we pay for mere manual labour, not for artistic skill; for in their case the very wage they receive is a pledge of their slavery.''" – [[De Officiis]] [http://www.constitution.org/rom/de_officiis.htm]</ref>
 
According to [[Noam Chomsky]], analysis of the psychological implications of wage slavery goes back to the [[Age of Enlightenment|Enlightenment]] era. In his 1791 book ''On the Limits of State Action'', classical [[liberalism|liberal]] thinker [[Wilhelm von Humboldt]] explained how "whatever does not spring from a man's free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness" and so when the labourer works under external control, "we may admire what he does, but we despise what he is."<ref>{{Harvnb|Chomsky|1993|p=[https://books.google.com/books?id=DIpW10rWZFAC&pg=PA19 19]}}.</ref> Both the [[Milgram experiment|Milgram]] and [[Stanford experiment]]s have been found useful in the psychological study of wage-based workplace relations.<ref>{{Harvnb|Thye|Lawler|2006}}.</ref>
 
The American philosopher [[John Dewey]] posited that until "[[economic exploitation|industrial feudalism]]" is replaced by "industrial [[democracy]]," politics will be "the shadow cast on society by big business".<ref>"As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance", in "The Need for a New Party" (1931), Later Works 6, p163</ref> [[Thomas Ferguson (academic)|Thomas Ferguson]] has postulated in his [[investment theory of party competition]] that the undemocratic nature of economic institutions under capitalism causes elections to become occasions when blocs of investors coalesce and compete to control the state.<ref>{{Harvnb|Ferguson|1995}}.</ref>
 
As per anthropologist [[David Graeber]], the earliest wage labour contracts we know about were in fact contracts for the rental of chattel slaves (usually the owner would receive a share of the money, and the slave, another, with which to maintain his or her living expenses.) Such arrangements, according to Graeber, were quite common in New World slavery as well, whether in the United States or Brazil. C. L. R. James argued that most of the techniques of human organisation employed on factory workers during the industrial revolution were first developed on slave plantations.<ref>{{Harvnb|Graeber|2004|p=[http://www.eleuthera.it/files/materiali/David_Graeber_Fragments_%20Anarchist_Anthropology.pdf 37]}}.</ref>
 
Additionally, [[Karl Marx|Marxists]] posit that labour-as-commodity, which is how they regard wage labour,<ref>{{Harvnb|Marx|1990|p=1006}}: "[L]abour-power, a commodity sold by the worker himself."</ref> provides an absolutely fundamental point of attack against [[capitalism]].<ref>Another one, of course, being the capitalists' alleged theft from workers via [[surplus-value]].</ref> "It can be persuasively argued," noted one concerned philosopher, "that the conception of the worker's labour as a commodity confirms Marx's stigmatisation of the wage system of private capitalism as 'wage-slavery;' that is, as an instrument of the capitalist's for reducing the worker's condition to that of a slave, if not below it."<ref>{{Harvnb|Nelson|1995|p=158}}. This Marxist objection is what motivated Nelson's essay, which claims that labour is not, in fact, a commodity.</ref>
 
==See also==
{{Portal|Organized labour}}
{{MultiCol}}
* [[Profession]]
* [[Retirement]]
* [[Employment]]
** [[Unemployment]]
** [[Employment Protection Legislation]]
** [[Compensation of employees]]
* [[Wages]]
** [[Wage labour]]
** [[Wage slavery]]
* [[Manual labour]]
* [[Affective labor]]
* [[Volunteer]]
* [[Unfree labour]]
* [[Slavery]]
* [[Offshore outsourcing]]
* [[Housework]]
{{ColBreak}}
* [[Human capital]]
* [[Human resources]]
** [[Human Resource Management Systems]]
* [[Cost the limit of price]]
* [[Demographic economics]]
* [[Microeconomics]]
* [[Beveridge curve]]
* [[Consumer theory]]
* [[Production theory basics]]
* [[Conditional factor demands]]
* [[Labour market flexibility]]
* [[Frisch elasticity of labor supply|Frisch elasticity of labour supply]]
* [[Labour power]]
* [[Monopsony]]
* [[Marginal factor cost]]
* [[Economic rent]]
* [[Industrial relations]]
* [[Protestant work ethic]]
{{EndMultiCol}}
 
==References==
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