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SubjectFree lesson

Labour Market

ClassNotes Team 5 MIN READUPDATED 15 JUN 2026

Economics S.S.S 1 Second Term

WEEK 8

Labour Market

Performance Objectives

Student should be able to:

  1. Explain the meaning of labour force, efficiency and mobility of labour force
  2. Factors affecting the size of the labour force

Content

Definition of labour, market and labour market

Labour: This refers to all human efforts either skilled or unskilled directed towards the production of goods and services.

Market: This refers to a place or any means of communication whereby the sellers and buyers can exchange goods and services at prices determined by the market forces.

Labour Market: is defined as a market in which buyers and sellers of labour are in close contact during which the wages and other conditions of services are determined and agreed upon.

The concept of labour force

This refers to the total number of people of working age in a country who are able and willing by law to work. It is the active or working population and it comprises all persons who have jobs and those who are seeking for jobs in the labour market. They are usually found between the age brackets of 18 to 65 years. Working population varies from one country to another.

Factors affecting the size of the labour force

  1. Population: As expected, population increases result in labour force increases. Both the strength of the influence and the magnitude are strong. A one per cent increase in state population results in a 0.74 per cent increase in labour force size.
  2. Income: As state incomes grow, it attracts labour force entrants hoping to take advantage. However, a state’s cost of living is shown to not influence labour force size and is not statistically significant.
  3. Educational Attainment: A more educated society has a larger labour force.
  4. Homeownership: A higher homeownership rate is associated with a slightly smaller labour force. Homeownership likely reduces this mobility and thus negatively impacts labour force size. Homeownership has many benefits for society, but this is one negative tradeoff.
  5. State-Specific Influences: The state binaries are generally positive and indicate a statewide influence regarding labour force size. Without further data, teasing out state-specific causes is problematic. The purpose of the binary is simply to recognize these potential influences and control for them.

Efficiency of labour

Efficiency of labour means the productive capacity of a worker. It indicates the ability of the worker to do more work or better work during a given period. 

Factors affecting the efficiency of labour

  1. Personal Qualities of Labourers: The efficiency of a worker is influenced by qualities which he acquires or possesses.

 

  1. General Education and Intelligence: There are certain qualities which a worker acquires by education, general and technical. Among these attributes may be mentioned honestly intelligence, perseverance, judgment, health and strength of the body, resourceful­ness, sense of responsibility, etc. Efficiency of labour depends also on these qualities. An honest intelligent and hard-working person will be more efficient in his work than one who lacks these qualities.
  2. Standard of Living: A worker having a high standard of living is more efficient than a worker having a low standard of living. Good nourishing food, suitable clothing, ventilated and comfortable home with healthy surroundings tend to increase the efficiency of the workers.
  3. Level of technology: High level of technology will increase the efficiency of labour.
  4. State of health if workers: A health worker is more likely to be more efficient than a worker who is sick.
  5. Security on the job: Efficiency of labour can be increased if a worker is sure that his job is secured.

Mobility of labour

This may be defined as the capacity and ability of labour to move from one place to another or from one occupation to another or from one industry to another.

There are two types of mobility. These are:

  1. Geographical mobility: Thus refers to the ease with which workers or labour can move from one geographical location to another in pursuing the same occupation or changing occupations.

Factors affecting geographical mobility

  1. Cost of transportation: A worker may be able to move from one location to another if the cost of transportation is low.
  2. Government policies: Certain government policies help to deliberately move labour to different state or region.
  3. Language barrier: When labour finds it difficult to speak the language of a particular area, it becomes very difficult for them to move to such an area.
  4. Family and cultural ties: Members of a family or culture may find it difficult to move from one location to the other because of strong family or cultural ties.
  5. Social and economic infrastructures: The availability of economic infrastructure does encourage labour to move to where these infrastructures are available.
  1. Occupational mobility of labour: This refers to the movement of labourer workers from one occupation or job to another.

Factors affecting occupational mobility of labour

  1. Cost and length of training: Some professions are costly to train in term of time and money.
  2. Trade union/ professional association restrictions: Some professional bodies require certain qualifications before admission.
  3. Wage rate: Labor will move if there is a wide margin in salaries but if it is low labour may not move.
  4. Political instability: When there is political instability or religious crises, it will be very difficult for labour to move
  5. Personal reasons: Personal preference for a particular job and dislike for available alternatives may discourage movements.