The Characteristics Of The New Labor Economics

By Author: kakaer
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Labor economics is an old economic specialty. It gets its raison d'être from the peculiarities of labors a commodity. Labor itself is not bought and sold; rather, its services are hired and rented out. But since people cannot be disassociated from their services, various nonmonetary considerations play a role in the sale of labor services as contrasted with the sale of machine time or the rental of land. Yet, the bulk of the literature in labor economics was until recently concerned solely with the demand side of the labor market. Wages, the textbooks all said, were determined by the "marginal productivity of labor," that is, by the relationships of production and by consumer demand. If the supply of labor came into ...
... the picture at all, it was merely to allow for the presence of trade unions; unions could only raise wages by limiting the supply of labor.

After a long period of neglect, the supply side of the labor market began, in the 20th century, to attract the attention of economists. First, attention shifted from the individual worker to the household as a supplier of labor services; the increasing tendency of married women to enter the labor force and the wide disparities and fluctuations observed in the rate that females participate in a labor force drew attention to the feet that an individual's decision to supply labor is not independent of the size, age structure, and asset holdings of the household to which he or she belongs. Second, the new concept of "human capital" that people make capital investments in their children and in themselves by incurring the costs of education and training, the costs of searching for better job opportunities, and the costs of migration to other labor markets has served as a unifying explanation of the diverse activities of households in labor markets. In this way, capital theory has become the dominant analytical tool of the labor economists, replacing or supplementing the traditional theory of consumer be savior. The economics of training and education, the economics of information, the economics of migration.

The economics of health and the economics of poverty are some of the by-products of this new perspective. A field that was at one time regarded as rather cut-and-dried has taken on new vitality.

Labor economics, old or new, has always regarded the explanation of wages as its principal task, including. The factors determining the general level of wages in an economy and the reasons for wage differentials between industries and occupations. Wages are influenced by trade unions; the impact of their activities is of increased importance at a time when most governments manage the economy with one eye on the unemployment statistics. The prewar fears of chronic unemployment gave way to the postwar fears of chronic inflation at or near levels of full employment.

In response to this a vast literature sprang up after 1945 analyzing the inflationary pressures stemming from both the supply side and the demand side of labor markets. Whether prices were being pushed up by the labor unions ("cost push") or pulled up by excess purchasing power ("demand pull") became the issues in this long debate on inflation, a controversy that is, of course, intimately related to the quarrels in monetary economics mentioned earlier.