The nature of the’ labor market and employment’
Labor market is a term used to describe the supply of workers in relation to the available work. In other words, it is a market characterized by two chief processes; workers competing for the available jobs, and employers competing for workers. On its part, employment denotes a relationship between two parties, often an employer and an employee, based on what is commonly known as the employment contract. Labor market and employment has been a central focus among researchers from multiple disciplines, especially within the economic field. From this general concept, various research topics have been derived as an attempt to help understand it.
One of these is unemployment and reasons for it. Unemployment refers to a situation in which an individual, who has the ability and actively searches a job, fails to secure one. In an economy, there are a range of reasons for such a course. One of these is friction within a labor market. Friction is usually caused by the time people take to find jobs. Friction means that employment information is not perfect and this results to a person taking a considerable time finding work. The second reason for unemployment is the structure of the labor market. There are time in which a labor market is characterized by a mismatch of skills, which is caused by occupational and geographical immobility, a change in technology, and a change in the economic structure.
For instance, as with the case of occupational immobility, job applicants often experiences difficulties in learning new sets of skills that applies to a new industry and thus making it hard to secure a job. A further reason for unemployment is wages. For instance, when the wages in a labor market that is competitive are pushed higher than the equilibrium point, a greater demand for labor is experienced. A point usually reaches where the demand exceeds supply and this could be equated to mean unemployment.
A further topic is the types of labor markets. There are two chief forms of labor markets. These include the primary and the secondary labor market. In a primary labor market, one has to be highly skilled in order to secure a job. Further, jobs in this market are highly paid, and have clear lines of advancement. Furthermore, jobs in this labor market category tend to offer an above average degree of job security and training. In stark contrast, jobs classified under the secondary labor market category are paid lowly, the prestige attached to them is low, they have limited security, and in most cases offer restricted advancement opportunities. These jobs are in most cases referred to as “dead-end” jobs.
Labor flexibility is also a factor attributed with labor market and employment. It is the degree or the pace at which labor adapt to changes and fluctuations in the labor market. The level of labor flexibility is determined by a number of factors. These include the working hours, cross-training, location of workplaces, as well as, wages. Cahuc and Postel-Vinay (2002) stated that the nature of regulations that govern the labor market also play a role in determining the degree of labor flexibility.
Skill shortage is also a major constituent of the labor market and employment. Cahuc and Postel-Vinay (2002) defined skills shortage as a situation in the labor market where the number of individuals with specialist skills needed to undertake a given form of work is lacking or insufficient. Skill shortage often differs in nature and cause.