One of the fundamental parts of the modern economy in all countries of the world is the labor market. It is difficult to underestimate the role of this mechanism, since its meaning lies in the fact that billions of people who sell their labor receive a means of subsistence, and millions of organizations receive the personnel they need to function. This is why the labor market is needed in the first place. That is why it is necessary to know its essence, meaning and features not only for economists and owners of large companies, but for absolutely all people.
Labor market concept
The labor market is a platform where the employer and the applicant meet and enter into an employment contract. This is a kind of system of mutually beneficial relationships, social and economic, between two entities.
One party to the employment contract is the person who needs the job. The other is, as a rule, a legal or natural person who needs professional personnel or labor and who is able to employ the applicant.
As in any other market, there is a product here - this is labor. Human, job seeker, acts as a seller of his knowledge, time, abilities and skills. And he wants to receive a reward for the offered goods in
Market elements
Market elements are:
- applicant and employer;
- supply and demand, their relationship;
- laws regulating the mechanism of the market;
- organization of employment services;
- career guidance services, enterprises for improving the qualifications of workers;
- organizations for temporary employment, home work, etc.);
- a system of state financial support for citizens who have lost their jobs due to layoffs, are transferred to another place of work, or are simply unemployed.
Applicant and employer as market subjects
The following groups of able-bodied citizens are applicants on the labor market:
- citizens who do not have a job and want to find a job; perhaps individuals already or people simply looking for a job on their own;
- people who are working, but want to change their place of work for some reason, looking for another position;
- able-bodied citizens who are on the verge of being fired.
Employers in this market can be:
- various forms of enterprises and organizations (legal entities);
- individual entrepreneurs (individuals).
Market functions
Why the labor market is needed is easy to understand by considering its main task and the functions arising from it. Thus, the main goal of this mechanism is to organize full employment of the population while meeting the needs for hired workers from enterprises and organizations.
The market in question achieves this through the following functions:
- organizing meetings of enterprise representatives and job seekers;
- ensuring healthy competition among market participants;
- establishment of equilibrium wage rates.
The market is undergoing the process of agreeing and signing a contract for the purchase and sale of human labor on mutually beneficial terms. A well-functioning mechanism contributes to the most useful use of people’s labor potential, which means that at the macro level the economy is in the black. The labor market, therefore, performs a regulatory function.
Having examined in more detail the labor market, its concept and functions, we can ask the question of what contributes to its emergence in countries and what its condition is today.
Economic prerequisites for the formation of the labor market
To understand why the labor market is needed, you need to know that it is formed in any country primarily with the advent of economic prerequisites. These are:
- Liberalization of all spheres of the economy. Its essence is the right to private property, to the availability of means of production and land in one’s own possession.
- Recognition of a person's freedom of choice in professional and labor terms. That is, everyone can decide for themselves where and how to work, for what pay and whether to work at all. At the same time, forced labor actions are prohibited in the country, with the exception of those imposed as punishment by justice.
- Freedom of entrepreneurship as a type of activity. Every person in the state, alone or with a group of people, has the right to freely open their own business.
Thus, education and the functioning of the labor market are influenced by the economy. The labor market cannot be formed outside of it.
Social prerequisites for market formation
For the formation of a labor market, in addition to economic aspects, sociological prerequisites are also necessary, which consist in the formation of inequality in income level, length of service and qualifications of work, degree of health and level of education between people. As well as differences in mental abilities and personal qualities (endurance, physical strength, charm, etc.).
This kind of thing should be balanced by government authorities with the help of federal and municipal programs to protect the population from unemployment, thanks to pension payments, subsidies low-income families and health insurance.
Legal prerequisites for the formation of the labor market
The legal prerequisites, thanks to which the labor market and the mechanism of its functioning are formed, include laws and government orders that can protect the population economically and socially, aimed at individual rights and freedoms. In the Russian Federation, for example, these were:
- Constitution of the Russian Federation, art. 7, which states that the Russian Federation is welfare state, the purpose of which is to create conditions that ensure a decent life and free development of people.
- The Labor Code of the Russian Federation, which lists and explains the rules for monitoring and regulating labor relations.
- The Civil Code, which defines the organizational and legal forms of business.
- Federal Law No. 10321 “On employment in Russian Federation", Federal Law No. 207-FZ "On collective contracts and agreements", Federal Law No. 10-FZ "On trade unions, their rights and guarantees of activity" and others.
Supply and demand in the labor market
From the definition of the labor market and the description of its subjects, it becomes clear that this mechanism is based on such economic concepts like supply and demand. Demand is the availability of open vacancies, it reflects And supply is the number of unemployed people ready to sell their labor to an employer. In whatever country it is organized and whatever the labor market is, supply and demand in the labor market always exist. They change depending on external and internal factors.
Thus, demand in the labor market depends primarily on the level of wages. Its connection under normal conditions, with ideal competition, is inversely proportional to the price of labor. Also, the level of demand is influenced by other economic facts, such as, for example, the demand for goods produced by the enterprise, the level of its technological equipment or the price of capital of the company.
The supply of labor, on the contrary, is directly proportional. That is, if wages rise, the number of people willing and able to sell their professional skills at a given cost increases.
In addition to the level of wages, labor supply is influenced by varying degrees the number of working-age population, the number of hours allocated to work per day, week, year, professional and qualification characteristics of the working masses.
Supply and demand in the labor market shape market conditions. It, with their different ratios, can be as follows:
- with a labor shortage (the market is experiencing a shortage of labor resources);
- with a labor surplus (the market is overflowing with labor supply);
- balanced (supply and demand are in equilibrium).
Subjective and objective influence on the functioning of the labor market
Undoubtedly, the state is capable of regulating the functioning of the labor market. This action can be exerted at various levels of government:
- federal laws (for regulation at the level of the entire country);
- regional or local (to regulate local labor markets according to their specifics).
The labor market may also be affected by public organizations, such as, for example, trade unions.
But it is not only the subjective regulation of employment and unemployment that determines how the labor market will function. Supply and demand in the labor market undoubtedly also play a significant role in this process. Moreover, their influence will be independent of the will and opinions of people, since it will be based on economic laws. That is, it will be objective.
Labor market models
What might the labor market be like? The classification of markets can be as follows:
- depending on the degree of competition (fully competitive market, monopsony market);
- depending on national characteristics (Japanese model, US model, Swedish model).
A fully competitive labor market is one that includes a large number of firms and organizations competing with each other, as well as quite a lot of workers entering into confrontation with each other. With this model of the labor market, neither enterprises nor workers can dictate their own conditions.
Monopsony is a labor market that consists of a monopoly on the part of one of the buyers of labor. With this model, almost all workers are employed at one enterprise, without having the opportunity to choose. Therefore, the firm dictates own rules, including setting wages. This model is typical for small settlements where one large plant or organization operates.
The labor market is characterized by a system of lifetime employment, that is, an employee works in the same place until he reaches retirement age. At the same time, his salary and social payments directly depend on length of service. Advanced training and career growth occur strictly according to plan. If an organization needs to make reductions, workers are not fired, but simply transferred to short working hours.
The US labor market model is based on the decentralization of legislation regarding employment and assistance to the unemployed. Each state makes its own rules. In organizations, there is strict discipline and a disloyal attitude towards employees. Career growth does not occur within the company, but by leaving for another company. The unemployment rate in America is very high compared to other countries. This is the labor market in the United States, and the causes of unemployment arise from its characteristics.
The Swedish labor market model is distinguished by the large influence of the state on the employment of the population. There is a minimum level of unemployment due to its prevention.
Specifics of the labor market
It is worth noting that the modern labor market and its features in every state, in every region and even in every locality vary. But the main thing distinctive features of all markets is that the subject of purchase and sale is labor. The fact that the seller and the product cannot be separated from each other, as well as the fact that the product itself cannot be stored when it is not needed.
A specific feature of all these markets is the impossibility of setting wages below those specified by the state.
Why the labor market is needed is easy to understand by considering its concept, goals, models and prerequisites for its emergence. In general, we can say that it is the basis of a market economy. This means he is able to dictate his own laws.
From an economic point of view, labor is the most important production resource. In accordance with this, there are two main functions of the labor market:
Social function is to provide normal level income and well-being of people, the normal level of reproduction of the productive abilities of workers.
Economic The function of the labor market is the rational involvement, distribution, regulation and use of labor.
Labor supply and demand
Demand for labor determined by the needs of employers to hire a certain number of workers with the necessary qualifications to produce goods and services.
The demand for labor is in inverse relationship from the real wage rate, which is defined as the ratio of nominal wages to the price level. In a competitive labor market, the labor demand curve has a negative slope: with increasing general level wage demand for labor falls.
Labor supply is determined by the size of the population, the share of the working-age population in it, the average number of hours worked by a worker per year, the quality of labor and the qualifications of workers.
The supply of labor depends on the wage. The labor supply curve has a positive slope: as the general wage level rises, the supply of labor increases.
The essence of the labor market
Labor market() is an important multifaceted sphere of economic and economic-political life of society. In the labor market, the cost of labor is assessed, the conditions for its employment are determined, including the amount of wages, working conditions, job security, educational opportunities, professional growth etc.
Labor market models
In Western economic theories, the labor market is a market where one of the other productive resources is sold. Here we can highlight four main conceptual approaches to the analysis of the functioning of the modern labor market.
The first concept is based on the postulates of classical political economy. Proponents of this concept believe that labor market, like all other markets act on the basis of price equilibrium, i.e. the main market regulator is price - in this case, labor force (wages). It is with the help of wages that, in their opinion, the demand and supply of labor are regulated and their balance is maintained. Investments in education and qualifications (in human capital) are analogues of investments in machinery and equipment. According to the price equilibrium model, an individual “invests in skills” until the rate of return on this investment decreases. From the neoclassical concept it follows that the price of labor flexibly responds to market needs, increasing or decreasing depending on supply and demand, and impossible if there is equilibrium in the labor market.
Classic labor market modelKeynesians and monetarists take a different approach to explaining the functioning of the labor market. Unlike the neoclassicalists, they view the labor market as a phenomenon of permanent and fundamental disequilibrium.
Keynesian model, in particular, comes from the fact that labor price(wage) rigidly fixed and practically does not change(especially downwards). This element is not proven in any way; it is taken as an unconditional fact. Since price, according to this concept, is not a market regulator, such a regulator must be brought in from outside. His the role is given to the state, which, by decreasing or increasing aggregate demand, can eliminate this disequilibrium.
Like supporters of the Keynesian approach, representatives of the monetarist school (primarily M. Friedman) proceed from a rigid structure of labor prices, moreover, from the premise of their unidirectional, upward movement. Monetarists introduce the concept of a certain natural rate of unemployment, reflecting structural characteristics labor market, making prices inflexible, preventing its normal functioning, exacerbating its imbalance and, therefore, unemployment.
Another common approach to the mechanism of functioning of the labor market is presented school of institutionalists. It focuses on the analysis of occupational and sectoral differences in the labor force structure and corresponding wage levels. Here there is a departure from macroeconomic analysis and an attempt to explain the nature of the market by the dynamics of individual industries, professional and demographic groups.
And finally, in Marxist economic theory The labor market is defined as a special kind of market. It is distinguished from others by the difference between the commodity “labor power” and physical capital. If labor power creates value in the labor process, then all other types of resources are only transferred to new value by labor itself. Because of this, Marxists believe that the labor market, although subject to general market laws, has significant features, since labor itself, as a subjective factor of production, being a commodity, at the same time actively influences the ratio of supply and demand, its market price .
Thus, labor market, generally obeying the laws of supply and demand, according to many principles of the mechanism of its functioning represents a special kind of market, which has a number of significant differences from other market products. The regulator here is not only macro- and microeconomic factors, but also social and socio-psychological factors, which are by no means always related to the price of labor - wages.
In real economic life The dynamics of the labor market are affected by a number of factors that influence both the supply of labor and the demand for it. So, labor supply is determined primarily by demographic factors— the birth rate, the growth rate of the working-age population, its gender and age structure.
In addition to demographics, an important factor in market dynamics is the degree of economic activity of various demographic and ethnic groups of the working population. For example, the rapid inclusion of women in the labor force, due to the activation of their social role, led to an increase in labor supply.
Serious processes influence labor force dynamics. In the United States, it accounts for an average of 20% of the country's population growth. In addition to legal immigrants, several million illegal immigrants live in the United States, mostly from Latin American countries. It is clear that the process of immigration into a country increases the overall supply of labor in the labor market and increases competition in it.
Changes in labor force structure
Towards the workforce statistics in usually includes all employees(including military personnel) and unemployed. A synonym for the concept is the category "". The statistics also highlight the civilian workforce, excluding military personnel.
In the changes taking place in the sectoral structure of the labor force in recent decades, two major trends can be traced: sharp reduction in the number of people employed in agriculture and essential increasing them in due to its expansion and development into a leading application area social labor.
The same thing happens in the 70s and 80s accelerated employment growth in knowledge-intensive sectors of the economy. Employment here is growing twice as fast as in industry as a whole. In Russia, the sectoral structure of employment is currently directly opposite to that which has developed in developed countries - 54% of the workforce is employed in material production, and only 46% in the service sector.
The evolution of the professional and qualification composition of the workforce is also noticeable. The very concept of “professional and qualification structure of the workforce” is ambiguous. It includes three independent, although closely related concepts:
- Professional structure— a set of representatives of various professions and professional groups;
- Qualification structure— a set of workers of various skill levels.
- Qualification various professions represents a set of skills, knowledge, experience, and other qualification components required to perform a given job.
The number of specialists in fundamentally new professions related to the development of scientific and technological progress, systems analysts, specialists in the field of genetic engineering, electronic computer engineers. At the same time, the introduction of computers and other information technology reduces the need for a number of categories of highly qualified employees and lower management personnel involved in the collection, systematization and primary processing of economic information.
Speaking about the qualified structure, it should be noted that characteristic feature The qualitative evolution of the modern workforce is the growth of its educational level.
The scientific and technological revolution is causing controversial shifts in the qualifications of the workforce. In principle, the impact of a new technology on the content of labor can be threefold: as a result of its implementation, some production functions can be eliminated, new functions can be created, and, finally, the functions themselves, preserved, can be transferred to the machine.
The main direction of the ongoing evolution in the content of the qualification consists of a transition from predominantly physical work, consisting of manual operation of machines and units, to predominantly non-physical work, expressed in the analysis and control of production processes. Of course, this is only a trend; a minority of workers still find themselves in this situation, since new technology is not dominant.
Features of the labor market
The peculiarity of the national market is that a complete state cannot be achieved in it. This is due to the fact that for development national economy it is necessary to have unused or not yet developed resources, which include labor resources. The presence of free labor resources not involved in the economy allows it to develop. With total employment, development either stops completely or occurs at a slow pace.
In relation to the labor market, the following categories of the population are distinguished:
- . This is a population that does not perform any economic functions either because they are of a working age or due to their inability to do so for physical reasons - disabled people. It does not participate in the functioning of the economy and is therefore not considered part of the labor market;
- . This is the population that receives Active participation in economic activity, is of working age and has physical capabilities to carry out economic activities. It is divided into the population employed and not employed in the national economy. The labor market consists precisely of this second group of the population, which determines its functioning.
- wage dynamics;
- state of the national economy. The labor market is one of the most susceptible to influence from other markets. For example, a change in the cost of consumer goods will inevitably entail a change in the level of wages;
- dynamics of income not formed under the influence of the labor market. For example, an increase in child benefits will lead to changes in the state of the labor market;
- dynamics of leisure preferences of the population;
- changes in the psychological perception of certain professions. For example, a decrease in the prestige of a certain profession will lead to a transformation of the labor market;
- dynamics of the demographic situation.
Thus, the labor market is a fundamental element. The functioning of the national economy depends on its dynamics and condition. During its operation, it is influenced by many factors.
Supply and demand in the labor market
The functioning of the labor market is based on the fact that the population, in order to lead normal life activities, is forced to sell their labor for remuneration, which is presented in the form. Here the specific product is work- a certain set of intellectual, spiritual, physical abilities of a person, which, in general, represent individual labor potential. On the other hand, another part of the population agrees to pay employees. In the labor market they are employers.
Demand on the labor market- represents the totality of demand for the country’s labor resources at any price for them.
Supply on the labor market— this is the total supply of labor resources of workers in the country at all possible labor prices.
Factors influencing supply and demand in the labor market
Main labor market indicator is salary, which is determined, among other things, based on the total cost of goods necessary to ensure normal human life. This point is the starting point below which it is impossible to set wages. The final level of remuneration is determined under the influence of many factors, the main of which include supply and demand in the labor market.
The main factors influencing the size of wages are:- age and gender structure of the labor market. The labor market is greatly influenced by the number of people of different age and gender groups in it;
- the nature of the intensity of social labor;
- productivity of social labor;
- the level of socio-economic development of the national economy;
- the level of scientific and technological development of the national economy;
- geographical, natural and climatic distribution of labor resources.
Changes in the level and size of wages are in direct interaction with changes in supply and demand in the labor market. Another important factor that has a decisive impact on the functioning of the labor market is demand - the employer’s need for employees with certain qualifications and professional characteristics.
Demand in the labor market is formed under the influence of the following factors:- structures of social production;
- the level of development and scale of the structure of social production;
- dominant forms of social production;
- volumes of social production;
- the level of scientific and technological development and equipment of the national economy;
- rates of growth and development of the national economy.
- average wage level;
- population size and overall demographic situation;
- professional structure of the labor market (consists in an overabundance or shortage of certain professions);
- population mobility;
- ethnic, religious, cultural, psychological characteristics population;
Subjects of demand in the labor market business and the state act, and the subjects of supply are households.
In a perfectly competitive market, the number of workers hired by an entrepreneur is determined by two indicators - wages and the marginal product of labor in monetary terms.
The attraction of an additional unit of labor will stop when these indicators become equal, i.e. .
The functional relationship between the amount of wages and the volume of labor demand is expressed in the form of a labor demand curve (Fig. 13.4).
Labor supply also depends on the wages received for productive services. Sellers in the labor market strive to increase supply as wages rise. Therefore, the labor supply curve has a positive slope (Figure 13.5).
Combining both graphs - the demand curve and the supply curve, we obtain the intersection point E, at which the demand for labor is equal to the supply of labor, i.e. the labor market is in equilibrium(Fig. 13.6). This means that all entrepreneurs who agree to pay wages find the required amount of labor on the market, their demand for labor is fully satisfied. In a state of market equilibrium, all workers willing to offer their services at a wage are fully employed. Therefore, the point determines the position. For any other wage value other than , the equilibrium in the labor market is disrupted. When the demand for labor and the supply of labor coincide wages act as the equilibrium price in the labor market.
If the wage rate is above the equilibrium level, supply in the labor market exceeds demand. In this situation, there is a deviation from the situation of full employment; there are not enough jobs for everyone who wants to sell their labor at high wages. Arises excess labor supply.
If the wage rate decreases compared to the equilibrium, demand in the labor market exceeds supply. As a result of this, unfilled jobs due to a lack of workers willing to accept lower wages.
Both of these situations (unemployment and the presence of unoccupied jobs) cannot be sustainable (long-term); they are corrected by the market mechanism towards restoring the situation of full employment.
Thus, the labor market is developing, like any market, according to the laws of supply and demand, equilibrium is restored in it, and there cannot be long-term unemployment.
However, unemployment exists. The presence of persistent unemployment only indicates that there are no conditions of perfect competition in the labor market: free flow of resources in various segments of the labor market, flexible wages, perfect information, etc. In the labor market there are so-called non-competitive factors, which include various institutions. Firstly, they include state, actively regulating the labor market, depriving wages of market flexibility. Secondly, unions, providing big influence on the level of wages in the direction of its increase compared to the equilibrium level. Third, large corporations tend to establish a standard wage rate that is relatively stable over time, refusing to revise it too often depending on the relationship between supply and demand in the labor market.
Regulation of the labor market involves influencing both the demand and supply of labor. Objects of regulation are wages, duration working week and vacations, hiring and firing procedures, various types of social security, etc.
1. The labor market, its elements and features.
2. Unemployment, its forms and causes.
3. Natural rate of unemployment. Okun's Law .
4. Government regulation labor market. Phillips curve.
Labor market or the labor market is an integral part of the general market space, performing the function of distributing and redistributing social labor across economic sectors, types and forms of activity in accordance with the structure of social needs.
Basic elements of the labor market(like any market):
Demand for labor,
Labor supply,
Labor price
Competition.
Demand reflects volume and structure social need for labor represented on the labor market and ensured by the availability of a workplace and a wage fund and means of subsistence.
Work offer strength characterized by the number and composition of workers capable of working and interested in getting hired work. Workers vary in gender, age, nationality, profession, and skill level.
At the cost of labor wages appear. A purchase and sale transaction will take place only if the employee meets the requirements of the workplace, and the workplace meets the interests of the employee.
The labor market is based on competition between entrepreneurs for attracting labor, between employees for filling vacancies, and between employees and employers for the terms of the employment agreement and remuneration.
The labor market has a number of features.
The fundamental difference between labor from other resources is that labor is a form of human life, the realization of his life goals and interests. Therefore, the price of labor is not just some price for a resource, it is the price of living standards, social prestige, and the well-being of the worker and his family. Thus, the main feature of the labor market lies in the product itself, which differs from all other resources.
Second difference: the seller of a commodity, labor power, the worker is inseparable from his commodity, he is inseparable from his ability to work, and the utility of this commodity during productive use is not destroyed, but is preserved, restored and accumulated. If an employee is properly exploited, he will improve his skills and bring greater returns.
Two main labor market functions:
1. Social function. It consists in ensuring a normal level of income and well-being of people, a normal level of reproduction of the worker’s productive abilities.
2. Economic function , which consists in the rational involvement, distribution and use of labor.
There are also a number of stimulating functions - advanced training, increased interest.
Classic labor market model - This competitive market model: a large number of sellers, a large number of employers and a price corresponding to supply and demand, i.e. This standard model competitive market.
Balance point depends on supply and demand. At the equilibrium point, there is full employment in the labor market - everyone who wanted to get a job for this salary, they got it, whoever wants a higher salary is looking for a job (Fig. 12).
Rice. 12. Classic labor market model
If wages are influenced by trade unions suddenly increases, then a situation will arise when firms will hire fewer workers, and workers will work more for increased wages, i.e. unemployment will arise.
Inflated salaries cannot be long, because there is competition, the market will return to equilibrium - this is from the point of view of the classics.
World economic crisis of 1929-33 showed that unemployment can be long-lasting. Ways to reduce unemployment during a crisis of overproduction revealed Keynes .
Another feature of the labor market- it can be characterized monopsony(one buyer) or oligopsony(several buyers), when on the demand side the market is represented by one or more hiring firms. For example, one large enterprise and all jobs are associated with its operation - a city-forming enterprise. The salary rate depends on the company.
Another feature- each seller has only one unit of his goods, so he is more dependent on market conditions than the buyer. Many disparate sellers compete with each other, confronting a stronger buyer. Trade unions, which are organizations of labor sellers, are called upon to smooth out this situation. Trade unions in the course of their activities, concluding collective agreements with employers, seek wage increases, which can lead to negative consequences, since it affects the level of employment.
One of the four main factors of production is work, which in economic theory is understood as the contribution to the production process made by people in the form of expenditure of physical and mental energy. The term labor also refers to labor resources - the most important element of the wealth of society, the quality and quantity of which largely determine the level of economic development of individual countries.
In a market economy there is a specific labor market. It is an integral part of the structure of market relations and functions along with markets for other factors of production, goods, services . Labor market can be defined as a system of relations related to the supply and hiring of labor resources.
Functions of the labor market:
Providing production and services with labor resources, their distribution between enterprises, industries, regions;
Ensuring that employees have the opportunity to obtain a means of subsistence;
Agreeing on prices and working conditions between employees and employers;
Incentives for employees and employers:
Competition between hired workers enhances the economic motivation of labor, encourages them to improve their skills, and stimulates increased labor discipline;
Competition between employers to attract labor in the quantity and quality they need stimulates them to raise wages and improve working conditions.
Market relations presuppose self-regulation of the labor market. Elements of the self-regulation mechanism are supply and demand in the labor market, competition among workers and employers, and wages. As a result of the action of this mechanism, level and proportions of employment, wages, size and structure of unemployment.
Demand on the labor market represents the totality of demand for a country’s labor resources at any price for them.
Supply on the labor market This is the total supply of labor resources of workers in the country at all possible labor prices.
Demand in the labor market depends on:
Business conditions and phases of the economic cycle;
Technical level of production;
Situations in the investment sphere;
The current level of wages;
Tax policy.
Supply in the labor market depends on:
Demographic situation (size and age and gender composition of the population);
Internal and external migration of the working population;
Salary level;
The alternative cost of labor, the possibility of obtaining income from sources other than hired work.
In addition, trade unions influence supply and demand in the labor market. public policy in the field of employment, the level of development of the education system and vocational training. Of no small importance are national characteristics lifestyle.
The processes occurring in the labor market were studied by the classics of economic theory Adam Smith (1723-1790) and David Ricardo (1772-1823), as well as outstanding scientists of the 1920s, Karl Marx (1818-1883), Alfred Marshall (1842-1924), John Maynard Keynes ( 18831946). Were considered various models self-regulation of the labor market.
According to classic model , presented on the graph (Fig. 8.1), at the intersection point of lines D and S, reflecting supply and demand in the labor market, the equilibrium price of labor (wages W 0) and a certain level of employment E 0 are established. If the level of wages, for some reason, increases from W 0 to W 1, then the quantity of supply will increase, because an additional number of people will appear on the labor market who previously did not agree to work for wages W 1. However, the demand for labor will decrease, since it will be unprofitable for employers to hire labor because of its high cost. The supply of labor will exceed the demand for it, which will lead to an increase in unemployment. If the wage level falls to W 2, it will become profitable for employers to hire additional workers, which will increase the demand for labor. However, labor supply will decrease due to those who are not satisfied with the level of wages. As a result, demand in the labor market will exceed supply, and a labor shortage will arise. According to this approach, unemployment is largely due to voluntary nature , since it is associated with the reluctance of workers to work for what they consider to be insufficiently high wages. The main factor in the fight against unemployment is the reduction of wages.
Forecasting is the core of any trading system, which is why perfectly replicated ones can make you incredibly wealthy.
In modern neoclassical model labor market, household expenditures on education are considered as investments in human capital by analogy with firms’ investments in machinery and equipment. Wages act as a return on these investments. According to the neoclassical model, the price of labor flexibly responds to market needs, increasing or decreasing depending on supply and demand. Households invest in skills until the rate of return on this investment begins to decline. If price equilibrium is achieved in the labor market, then unemployment is impossible.
Keynesian model offers a different interpretation of the mechanism of functioning of the labor market. According to Keynes, the wage rate is a fixed value. The demand for labor does not depend on the level of wages, but on the volume of production in society, which in turn is determined by the size of aggregate demand. Exists involuntary unemployment , caused by insufficient aggregate demand. It is impossible to stimulate an increase in aggregate demand, and, consequently, employment, by lowering wages. The increase in demand for labor is the result of government measures that stimulate the growth of aggregate demand in the country.
Marxism considers the reserve army of labor as an inevitable attribute, and also necessary condition capitalist production. The levels of employment and unemployment, according to this theory, are determined by the needs of capital for self-expansion and depend on the ratio of capitalists' expenses on wages and the purchase of machinery, fluctuations in the economic cycle, and changes in the structure of production. Unemployment, generating competition between hired workers for jobs, puts pressure on the employed, allows the entrepreneur to reduce wages, and force workers to discipline.
IN institutionalist model the main focus is on analyzing the structure of the labor force. Levels of employment, unemployment, and wages are explained by the characteristics of individual industries, professional and demographic groups.
The processes taking place in the labor market determine level and nature of employment and unemployment in society. The part of the population that provides supply in the labor market, according to the methodology of international statistics, is classified as economically active population.
In our country, under the conditions of a planned economy, records were kept
labor resources, i.e. population of working age, with the exception of non-working disabled people and war veteransI and II groups and persons receiving an old-age pension and on preferential terms. Currently, Russian statistics use the indicator
economically active population, which includes those employed in the economy and the unemployed. The concept of labor resources is now used to designate one of the elements socio-economic potential of the country, included in national wealth part of the population that has the physical development, mental abilities, knowledge, qualifications, and labor discipline skills necessary for the successful development of social production.
Employment– This is the activity of people related to the satisfaction of personal and social needs, not prohibited by law, and generating (usually) earned income.
TO employed in the economy, According to the accepted methodology, these include persons who, during the period under review, performed hired work for remuneration, as well as income-generating self-employed work independently or with one or more partners, both with and without the involvement of hired workers. The number of employees also includes persons who performed work without pay in a family enterprise, as well as persons who were temporarily absent from work due to illness, care for the sick, annual leave, days off, training, educational leave, leave without pay or with partial pay. salary content on the initiative of the administration, strike.
The level and nature of employment of the population are important macroeconomic indicators that reflect demographic and social processes in society.
Depending on the criteria applied, there are the following classifications of employees:
By type of activity:
Those engaged in paid activities in the economy;
Military personnel (they are engaged in activities that do not generate direct cash income, but as they transition to contract form services will approach the status of those employed in the economy);
Work-away students;
By method of involvement in work:
wage-earners;
employers (entrepreneurs who hire workers and realize their entrepreneurial abilities);
self-employed (working for their own account, members of production cooperatives that do not employ hired force on a permanent basis);
The International Classification of Employment Status includes:
Wage-earners;
Employers;
Persons working for their own account;
Members of production cooperatives;
Helping family members;
Workers not classified by status.
IN macroeconomic analysis category is important full employment. In a planned economic system, full employment was understood as a state of the economy when all labor resources were involved in social production and other socially useful activities. In world economic theory and practice, full employment is considered achieved when everyone who wants to work has a job at the current level of wages. Full employment corresponds to a certain level natural unemployment no more than 3.5 – 6.5% of the total workforce.
The labor market is a system of competitive relations between market participants (entrepreneurs, workers and the state) regarding the hiring and use of workers in social production.
The object of purchase and sale in the labor market is the right to use labor; the subject of bargaining is a certain type of human ability and the duration of its use. It also characterizes relations in the sphere of employment regarding the exchange of functioning abilities to work for the monetary equivalent of means of subsistence, i.e. for wages.
The labor market has a number of features. The labor market includes not only the sphere of exchange (purchase and sale) of labor, but also the sphere of reproduction of labor potential (market mechanisms of education, vocational training, etc.) and the sphere of use of labor (market mechanisms of personnel management in production).
The constituent elements of the labor market are people who act as carriers of the labor force and are endowed with such human qualities as psychophysiological, social, cultural, religious, political, etc. These features have a significant impact on the interests, motivation, degree of labor activity of people and are reflected in the state of the market labor.
The fundamental difference between labor and all other types of production resources is that it is a form of human life, the realization of his life goals and interests. That is why the price of labor is not just a type of price for a resource, but the price of living standards, social prestige, and the well-being of the worker and his family.
Functions of the labor market
The functions of the labor market are determined by the role of labor in the life of society, when labor is the most important source of income and well-being. From an economic point of view, labor is the most important production resource. In accordance with this, the main functions of the labor market are identified.
The social function is to ensure a normal level of income and well-being of people, a normal level of reproduction of the productive abilities of workers.
The economic function of the labor market is the rational involvement, placement, regulation and use of labor, which makes it possible to highlight the placement and selective functions.
The allocation function is the allocation of labor based on and in accordance with demand. This function assumes that the organization and functioning of the labor market should serve the rational distribution of labor in individual enterprises, industries and regions. The formation of such an accommodation network is the basis for regulating the labor market at all levels of government. The more perfect the labor market system, the more effective the methods for achieving the main goals of management, the more noticeable the manifestation of the placement function. This means that the efficiency of the economy depends on how optimally the process of functioning of the labor market system occurs. This function mainly manifests itself at the regional and macro-regional levels.
The selective function is to select labor based on supply and demand, as well as on the professional and qualification characteristics of the labor force. This function is most significantly manifested at the microeconomic level.
The labor market also performs a stimulating function, promoting competition between its participants, increasing interest in highly effective work, improving skills and changing professions.
Classification of labor markets
Classification of labor markets is carried out on the basis of a variety of criteria.
According to the criterion of the spatial sphere of the labor market, one can distinguish (in relation to the federal type of state construction and administrative division Russia) federal, republican, regional, regional, city, district, rural labor markets, labor markets of megacities (such as Moscow, St. Petersburg, etc.). At the level of interstate social and labor relations, one can distinguish the international labor market, labor markets of interstate regions (European, Latin American, Central Asian, CIS countries).
Based on the criterion of time parameters, promising, forecast and current labor markets are distinguished.
According to the degree of elasticity, there are flexible and rigid labor markets.
In the total population, there are two large groups: people who are able and those who are not able to work for hire.
According to the criterion of the relationship between demand and supply of labor - equilibrium (balanced), deficit (demand exceeds supply) and excess (supply exceeds demand) labor markets. These types of labor market may be related to the regional, professional, integrated labor market.
According to the stage criterion, an emerging market, a transition period market, and a mature (or developed) labor market are distinguished.
According to the criterion of social group, markets are distinguished between predominantly physical labor (workers), predominantly mental labor (employees), predominantly creative labor (intelligentsia), peasant labor, etc. Within the limits specified social groups labor markets and qualifications are highlighted. Thus, among workers one can distinguish highly skilled, skilled, semi-skilled and unskilled groups. Segmentation of labor markets is dynamic and contradictory.
The work of a certain specialty or profession goes through various stages of the life cycle: from origin to extinction and death. At the stage of emergence and expansion of the scope of application of this profession, the demand for it grows, then decreases. The duration of each stage is determined by the life cycle of the technological process and equipment that caused the emergence of this profession.
The mechanism of functioning of the labor market
The main elements of the functioning mechanism of the labor market are the demand for labor, the supply of labor and the price of labor.
The demand for labor is determined by the needs of employers to hire a certain number of workers with the necessary qualifications to produce goods and services, taking into account aggregate demand. The demand curve for labor D/ has a negative angle: as the general level of wages rises, the demand for labor falls. This is clearly seen from the graph in Fig. 8.1, on which the horizontal axis is the quantity of labor (QL), and the vertical axis is the wage rate (W).
The market supply of labor for a certain type of labor at a given wage is the sum of the supply volumes of all workers. The total supply of labor in the economy depends on the number of workers willing to sell labor to employers. The number of such workers depends on the levels of fertility, mortality and migration of the population, the physical ability to be a productive worker, the availability of other sources of livelihood (other than wages), personal choice between work and leisure, and the opportunity cost of hired labor. Other sources of livelihood include pensions, benefits, subsidies, interest on invested capital, dividends and any other income that does not require direct work.
The supply of labor is also determined by the needs of people of working age for the normal reproduction of their abilities and maintaining a sufficient level of well-being, and therefore it, like demand, depends on the amount of wages. But the dependence here is different. The SL labor supply curve has a positive slope: as the general wage level rises, the supply of labor increases.
The individual supply of labor in a market economy occurs on the basis of a choice between leisure (time spent not related to work for pay) and work, subject to two restrictions: the number of hours in the day (which must be distributed between leisure and work) and the amount of wages.
When the latter changes, the employee's choice is influenced by the income effect and the substitution effect.
The graph shows a supply curve, which differs in its configuration from the usual one and shows the total amount of working time that an employee agrees to work for a given wage.
Up to a certain point (Wh), an increase in wages increases the supply of labor, which reaches its maximum value at point h. After reaching the maximum level, as wages continue to rise, the supply of labor (the amount of time worked) begins to decline. The same reason, namely, an increase in wages, leads to both an increase and a decrease in labor supply.
This happens because when hired for a job, a person chooses between work and free time. When wages increase for each hour of time worked, the employee perceives each hour of free time as lost profit (lost income). This benefit can actually be obtained by converting free time into working time by replacing free time with additional work. When wages increase, there is an incentive to sacrifice leisure in favor of a high-paying job and receiving higher income, which can be used to purchase additional benefits. As a result, labor supply increases. In this case, there is a substitution effect. On the graph, this effect appears when moving along the labor supply curve to point h.
The income effect is the opposite of the substitution effect and begins to appear when the employee reaches a sufficiently high level of income and material well-being. With further wage growth above the level Wh, the income effect begins to dominate, i.e. high incomes stimulate more varied and longer leisure time rather than work. At the same time, the employee has a desire not only to purchase more goods, but also to have more free time for leisure by reducing the amount of working time. Therefore, after point h, an income effect is observed when, as income increases, the supply of labor decreases. The labor supply curve takes the form of bending back towards the y-axis. The predominance of the substitution effect or the income effect at a given wage level depends both on the general economic situation and on the employee himself, who makes an independent decision in accordance with his preferences and interests.
So, the labor market is an economic environment or space in which, as a result of competition between economic agents through the mechanism of supply and demand, a certain volume of employment and wage level are established.