Knowra Labour economics Labour economics Labour economics studies how workers and employers make decisions, how wages and employment are determined, and how institutions and policies shape labor markets.
Labor supply : The amount of labor workers are willing and able to offer at different wages and working conditions. Workers’ participation and hours determine how much labor reaches the market.
Minimum wage : A legally mandated lower bound on hourly or other unit-based pay. Its effects on wages and hiring are a central policy question in labor economics.
Opportunity cost : The value of the best alternative forgone when a choice is made. It helps explain workers’ trade-offs between paid work, leisure, and other activities.
Perfect competition : A market structure with many buyers and sellers, homogeneous products, and no individual influence over market prices. Competitive labor-market models contrast with settings where employers or workers can influence wages.
Adam Smith : A Scottish economist and moral philosopher whose work helped establish classical political economy. His analysis of wages, occupational differences, and the division of labor shaped early economic thought.
Labor demand : The amount of labor employers are willing to hire at different wages and levels of output. Employers’ hiring choices determine the demand side of wage and employment outcomes.
Unemployment : A state in which people without jobs are available for work and actively seeking it. Labor economists study its causes, duration, and effects on workers and the wider economy.
Marginal productivity : The additional output produced by one more unit of an input, holding other inputs fixed. Many wage theories connect pay to the extra output attributable to a worker.
Efficiency wage : A wage set above the level that would clear the labor market, intended to improve productivity or reduce turnover. It challenges the idea that lowering wages always increases employers’ desired employment.
John R. Commons : An American institutional economist who studied labor relations, collective action, and the legal foundations of markets. His work made unions, labor law, and workplace institutions central to economic analysis.
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