LABOR

ECONOMICS
An Introduction
 Labour Economics
“Labour Economics may be
defined as a study of the
organization, institutions and
behavior of the labor market
in an industry or industrial
economy”.
 DEFINITION
“Labour economics or manpower
economics is primarily concerned with
efficient utilization and conservation of
manpower and resources. It studies and seeks to
understand the processes by which manpower is
applied and utilized in modern society. It is
concerned of natural resources in the land”.
- Dole Yoder
 SCOPE
Labour Economics has to deal –
Manpower Planning,
Labor Organization,
Labor Relations And Public Policy
Wage And Employment Theory,
Collective Bargaining Theory And
Practice Of Social Security And
Welfare Etc.
 AREAS OF STUDY
Institutional framework of the
particular economic system.
Size and composition of the labor
force and labor market.
Labor as a factor of production-
productivity and efficiency
condition
of work-industrial relation standard
of
 AREAS OF STUDY

Labor's risk and problems.

Trade unionism
Labor's status and position in
society
Labour legislation.
 LABOR
And

LABOR MARKET
 Labour
“Any exertion of mind or body
undergone partly or wholly with
a view to have some good other
than the pleasure derived
directly from the work”.
- Dr. Alfred Marshell
 Characteristics of Labour
 Cannot Be Separated From The
Person
 Worker Sells His Work Services
 Perishable Commodity
 A Paid Adjustment Of The
Supply Of Labour To Its Demand
Is Not Possible
 Characteristics of Labour
 Labour is Not Mobile as
Capital
 Less Marginal Productivity than
Capital
 Labour is a Living Thing
 Labor Market
“A process by which supplies of
particular type of labour and
demands for that type of labor seek
to obtain a balance”.
 Labor Market
“It is the only device for sorting out
worker with varying skills and
interest among the multitude of
different jobs in the economy”.
 Labor Market
“an area or place where relative wage
levels for different plants, industries
occupations and d regions are
determined”.
Characteristics of Labour Market
 Buyer Seller Relationship Is Not
 Temporary
 Essentially Local
 Lack Of Mobility
 An Imperfect Market
 Extremely Rare Monopoly
 Usually The Buyers Market
 Imperfections
• No equilibrium between demand for and
supply
• Wage differentials
• No perfect knowledge
• Lack of perfect mobility of labor.
• Barriers to the entry of labor
• Employer’s monopoly
• Institutional forces in determining
wages
 Demand For Labour
• Demand for commodities produced by
labor
• Availability of Capital
• Substitution between labour and
machinery
• Motives of the firms
• Labour productivity
• Wage rate and
 Supply of Labour
• Size of population.
• Rate of working population to total
population
• Rate of Males to Females
• Working Hours
• Age of Retirement
•Social Attitude
•Wage Level and Training Period :
•Potential Desire to Work
 Labor Mobility
“The ability and willingness of a worker
to move from one place to another place
or from one occupation to another
occupation to get a job is called mobility
of labour’.”
 Factors Effecting Labor Mobility
 New Climate
 Transport
 Accommodation
 Language Barriers
 Education And Training
 Diet And Food Habits
 Age And Time Of Transfer
 Psychological Conditions.
 Factors Effecting Labor Mobility
 Environment And Surroundings
 Political, Social Disturbance
 Cost Of Living
 Racial Differences
 Family Attachment
 Customs And Rituals Conventions
 Wages/Pay Scale
 Labor Efficiency
The ability or fitness of a
worker to produce goods and
services in proper quantity and
of the right quality which is
a given period
Factors Affecting Labor Efficiency
 Racial Stock
 Wages
 Climate
 Hours to Work
 Working Conditions
 Education and Training
 Welfare Activities
Improveing Efficiency Of Labour
 Motivating Labors through Wages
and Incentives
mutual argument between
management and workers
Improving industrial relations
Quality consciousness in
production and in cost control
Improveing Efficiency Of Labour
 material handling and better
internal management
 improve labour welfare
introducing modern methods of
organization
Wages
 Wage
“A sum of money paid under contract by an
employer to a worker for services
rendered.”
“payment made for all kinds of services,
whether by way of salaries or in any
other way is included in wages.”
 Concepts of Wages:-
Minimum Wage
Living Wage
Fair Wage
Nominal Wages:-
“The amount of money that a laborer
gets in exchange of his services.”
Real Wages:-
The amount of goods and services that
laborer can get with his nominal wages
Real Income= Money income/Price Level
 Calculating ‘Real Wages’
 Purchasing power of money
 Incidental advantages and benefits
 Working Conditions
 Possibility of extra earnings
 Nature of jobs
 Possibilities of promotion and success
 Social prestige and status
Training expenses
 Trade and office expenses
 Wage Differentials
 It is seldom seen that uniform level of
wages
 Wage difference is also found between
male and female workers
 Wage differences may be Horizontal

and Vertical
 Underlying Factor’s
 Difference in Skill And Efficiency
 Trade Unions
 Profitability of the Organization
 Status of the Organization
 Nature of Work
 Ignorance