In classical economics and all micro-economics labour is one of three factors of production, the others being land and capital. It is a measure of the work done by human beings. There are macro-economic system theories which have created a concept called human capital (referring to the skills that workers possess, not necessarily their actual work), although there are also counterposing macro-economic system theories that think human capital is a contradiction in terms.
Compensation and Measurement
Wage is a basic compensation for labour, and the compensation for labour per period of time is referred to as the wage rate. The two terms are sometimes used interchangeably.
Other frequently used terms include:
- wage = payment per unit of time (typically an hour)
- earnings = payment per over a period (typically a week, a month, or a year)
- total compensation = earnings + benefits
- income = total compensation + unearned income
- economic rent = total compensation - opportunity cost
Economists measure labour in terms of hours worked, total wages, or efficiency.
Types of labour