Labour refers to the people who are employed to work in the production of goods and services throughout an economy.
The labour force of a country is all of the people who are legally old enough and able to work. Those people who are working are paid a wage by their employer for the work which they complete.
The demand for labour from firms is dependent upon the demand for certain goods and services in an economy. The more demand for housing for example, will lead to an increase in the demand for construction workers and in turn allow these workers to receive a higher wage rate.
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Key terms:
Wage rate – the amount of money which a worker receives for one hour of work.
Derived demand – where the demand for one thing is a result of the demand for another.
Productivity of labour – the efficiency of workers. This is measured by the the total output divided by the number of workers.