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

SCOPELabour Economics has to deal –Manpower Planning, Labor Organization, Labor Relations And Public Policy Wage And Employment Theory, Collective Bargaining Theory AndPractice Of Social Security And Welfare Etc.

AREAS OF STUDYInstitutional 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 living

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 EfficiencyThe 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 Incentivesmutual argument between management and workersImproving industrial relationsQuality consciousness in production and in cost control

Improveing Efficiency Of Labour material handling and

better internal management improve labour welfareintroducing modern methods of organization

Wages

“A sum of money paid under contract by an employer to a worker for services rendered.”

Wage

“payment made for all kinds of services, whether by way of salaries or in any other way is included in wages.”

Minimum WageLiving WageFair Wage

Concepts of Wages:-

“The amount of money that a laborer gets in exchange of his services.”

Nominal Wages:-

The amount of goods and services that laborer can get with his nominal wages

Real Wages:-

Real Income= Money income/Price Level

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 statusTraining expenses Trade and office expenses

Calculating ‘Real Wages’

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

Wage Differentials

Difference in Skill And Efficiency Trade Unions Profitability of the Organization Status of the Organization Nature of Work Ignorance

Underlying Factor’s