The Labor Market

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Labor economics seeks to understand the functioning and dynamics of the markets for labour. Labor markets function through the interaction of workers and employers. Labour economics looks at the suppliers of labor services (workers), the demands of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income. There are three main groups of actors or participants in the labour market: individuals, firms (or employers), and the government. Individuals make labour market decisions concerning whether and when to enter the labour force, how much education, training and job search to undertake, what type of work (which occupation and industry), how many hours to work each week (and weeks per year), what wage, or wage increase, to demand, whether to quit one's current job and look for another job, possibly in another region, industry, or occupation, whether to join a union or employee association and when to retire. Firms make labour market decisions concerning how many workers to hire and how many hours of work to require, what type of worker to hire (what skills are required), what wages and fringe benefits to pay, when to lay-off employees and perhaps close a plant, what type of work can be subcontracted out, how to design an effective pension and retirement policy. Governments set various policies that have direct implications for the labour market decisions of individuals and firms. Human rights and anti-discrimination laws, employment standards and laws concerning minimum wages, hours of work and overtime, maternity and paternity leave, occupational health and safety laws, and workers compensation, providing subsidized university/college tuition and public training programs, labour relations laws regulating the collective bargaining process, (un)employment insurance and income maintenance (social assistance) policies, public pensions and providing jobs in the public sector. Labour market economics also involves...
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