Labour Market definition

The labour market is derived from the combined interactions between employers and employees – known as labour transactions – and the resulting exchange network that arises. Labour markets can vary in scale – the global labour market is the largest, but there are also labour markets on the local, national and quasi-political level (European Union).

Theoretical and practical issues around the labour market include unemployment, salaries, industrial relations and retirement.

Labour markets are influenced by collective bargaining agreements, although they are not as unionised as in the past. Some people criticise the concept of labour markets because they focus on a big numerical picture to the detriment of individual employment decisions, which are complex and can yield qualitative information about the employer-employee relationship.

A related term, labour market flexibility, relates to the speed at which labour markets respond to societal and economic fluctuations. Labour economics is the study of labour markets.