29.08.2023 in Economics

Labor Economics


Labor economics is a brunch of economics, which studies various aspects of the labor market. Basically, the need for its development arose because of the significance of labor exchange services in modern society. A large part of the population is engaged in providing them to receive wages. Some people are about to choose their career, and some have already finished it, but are still in some way related to the labor market. The basic categories of labor economics like the labor market, demand, and supply are complex and very important because they depend on many aspects which define the specifics of economy functioning in different countries, particularly the UAE.

Type of assignment
Type of service
Writer level
Number of pages
Total price:
Total price:



Labor Economics

Labor economics is a science that considers the interdependence between employers’ and employees’ behavior on the level of wages, prices, employment conditions, and employment relationships. These factors may motivate and at the same time limit choices made by the individual on the labor market. These incentives can be applied to a wide range of people and are universal factors inducing the behavior of employers and employees. Labor economics specifically dwells upon a wide range of categories related to the exchange of work services for wages. The main of them are labor demand and supply, labor contract and conditions, discrimination, payroll contribution, education, technological progress, and human migration based on wages and the level of employment, hiring and firing institutional framework, and the impact of policies on income redistribution. In general, the combination of these categories defines mechanisms of labor market functioning.

Labor Demand

Labor demand depends on the key factors, which can be analyzed in the context of employers’ plans. Basically, it shows the number of workers that can be hired at some definite cost during the given timeframe. The basic explanation of the labor demand phenomenon lies in the assumption that labor services are one of the components used by companies in combination with other resources like capital in order to maximize their profit. Thus, the demand for labor depends on its cost and efficiency, as performance is a factor which affects sale prices. The cost of labor comprises wages and social security packages paid by employers. The efficiency of labor services does not only depend on the qualification and experience of the employee but also on available technologies, quality and variety of materials, working conditions and individual characteristics like motivation and alertness. The higher the wage, the more expensive it is to hire extra workers. In case of low wages, the labor cost decreases, and it may result in an increase in labor demand.

Labor Supply

First of all, the supply of labor on the market depends on the decision of a person to work for a wage. The desired wage is the key factor influencing the amount of labor supply. Other important points to be considered are a family environment, personal wealth, and income received outside the labor market. Everyone has a limited amount of time, which this person chooses to divide between work and leisure. Actually, this leisure time involves hours spent on household duties like housekeeping, cooking, and raising children. Costs and benefits of these activities affect the supply of labor as the choice to devote more time to them is usually a result of planning and negotiations within the family. Once the person decides to work, the next question is what occupation and employer to choose. The main factors influencing this choice are connected to the level of wage for a definite occupation in comparison to other jobs on the labor market. If wages for a definite type of job rise, more people will be willing to choose this career. Some other factors having an impact on labor supply are barriers to entry, specific skills and knowledge needed to obtain a definite qualification, and non-monetary characteristics of various occupations like working conditions, overtime, and security.

Role of the Government in the Labor Market and Its Effect on the UAE Economy

The role of the government in the labor market is important as its main task is to establish a legal framework for the economy and to regulate labor relations according to the existing laws. Speaking of the UAE, it should be mentioned first of all that the central government of the country as well as the local authorities of Emirates have a huge positive impact on the formation of labor supply and demand on the country’s market. It is done mainly through the launch of many governmental projects fostering an increase in the labor force in the UAE. The establishment of regulations for companies, collection of taxes, and governmentally initiated transfers facilitate labor mobility and the process of goods flow. In fact, the government actually serves as one of the biggest consumers of goods produced in the country, and it ensures maximum utility received from the government spending. As a result, as a consumer, the government provides good profit to the country not exceeding the fixed share of GDP established by the UAE authorities. Thus, the income received from such governmental projects plays a vital role in supply and demand dynamics on the labor market of the UAE.


Labor economic is a science, which studies peculiarities of relationships between employers and employees under conditions of different work settings wages. Labor demand and labor supply are the key complex notions, which define the mechanism of labor market functioning. The first depends on the qualification of the worker and the desired cost of work. The supply of labor is defined by the level of wages for a definite occupation and a lot of individual factors like the decision to devote some part of time to hold a paid job. The role of the government in the labor market is significant as it regulates labor relationships with the help of the laws. In some countries, it also fosters the development of the labor market through the formation of labor supply and demand by launching various projects. A good example of this is governmental activities in the UAE.

Related essays