Employment & Labour

NODE 01

Labour

• Human physical & mental effort in production.
• Fundamental factor of production.
• Labour → Production → Income.

NODE 02

Work vs Employment

vs

• Work = productive human activity (paid or unpaid).
• E.g., household work is valuable but unpaid.
• Employment ≠ all economically productive work.

NODE 03

Employment

→

• Engaging in economic activity for remuneration/profit.
• Salary, self-employment, farm work, business.

NODE 04

Employed Person

• Someone engaged in economic activity.
• Wage, self-employment, casual, regular forms.

NODE 05

Labour Force

• Employed + Unemployed (actively seeking).
• The pool of available labor.

NODE 06

Outside Labour Force

📚 🏠

• Students, retired, household responsibilities.
• Not seeking work.
• Working-age pop ≠ automatically labour force.

NODE 07

LFPR

LABOUR FORCE WORKING-AGE POP

• Labour Force Participation Rate.
• Proportion of relevant pop active in market.

NODE 08

Worker Pop Ratio (WPR)

EMPLOYED POPULATION

• Proportion of the population actually employed.

NODE 09

Unemployment

• Without work, available, AND seeking work.

NODE 10

Unemployment Rate

UNEMPLOYED LABOUR FORCE

• Denominator is Labour Force, NOT total population.

NODE 11

Emp Rate vs Unemp Rate

EMP RATE/ POP

UNEMP RATE/ LF

• Measure different aspects of labour-market participation.

NODE 12

Frictional Unemp

• Temporary, arising from changing jobs, entering market.
• Normal labour-market transitions.

NODE 13

Structural Unemp

≠

• Mismatch between worker skills/location and available jobs.
• Causes: tech changes, industrial restructuring.

NODE 14

Cyclical Unemp

• Due to fluctuations in aggregate economic activity.
• Recession: Demand ↓ → Prod ↓ → Labour demand ↓.
• Connects to Realm 10.

NODE 15

Seasonal Unemp

☼

❄

• Employment varies by season.
• Agri, tourism, construction.

NODE 16

Disguised Unemp

• More people engaged than required for output.
• Removing workers has little effect on output.
• Common in agriculture / family enterprises.

NODE 17

Underemployment

• Employed but underutilising available labour.
• Fewer hours, below skill level, low productivity.
• Employment ≠ adequate employment.

NODE 18

Open Unemployment

👀

• People with NO employment, seeking/available for work.

NODE 19

Voluntary vs Involuntary

|

• Voluntary: Chooses not to accept available work.
• Involuntary: Willing/able but cannot obtain work.

NODE 20

Labour Demand

• Quantity of labour firms are willing/able to hire.
• Derived from firm's demand for output.

NODE 21

Labour Supply

→

• Amount of labour individuals are willing/able to offer.
• Influenced by wages, conditions, preferences, taxes.

NODE 22

Wage

→

• Payment received by labour for work.
• Hourly, daily, monthly, annual.

NODE 23

Nominal Wage

₹40,000 / MO

• Measured in money terms.

NODE 24

Real Wage

NOMINAL WAGE PRICE LEVEL

• Measures purchasing power.
• Nominal wage ↑ doesn't mean real wage ↑ if prices rise rapidly.
• Connects to Realm 11.

NODE 25

Labour-Market Eq

• Competitive model: Labour Demand = Labour Supply.
• Altered by min wages, unions, discrimination, mobility.

NODE 26

Minimum Wage

• Legally established minimum remuneration.
• If above market-clearing: Supply > Demand.
• Actual effects depend on market structure/enforcement.

NODE 27

Labour Unions

• Represent workers collectively.
• Negotiate wages, hours, conditions, security.

NODE 28

Collective Bargaining

↔

• Negotiation between workers/reps and employers.
• Over employment conditions.

NODE 29

HC & Productivity

🧠→

• Edu, training, experience, health.
• Human Capital ↑ → Labour Productivity ↑.
• Connects to Realm 14.

NODE 30

Labour Productivity

→

• Output ÷ Labour Input.
• Supports higher real wages, competitiveness, living standards.

NODE 31

Skill Development

↗ 🎓

• Improves ability to perform productive tasks.
• Tech training, vocational, digital skills.

NODE 32

Skill Mismatch

≠

• Available skills ≠ skills demanded.
• Consequences: Vacancies + Unemployment simultaneously.
• Lower productivity/wages.

NODE 33

Informal Economy

• Not fully covered by formal arrangements.
• Small unregistered enterprises, casual labour, street vending.

NODE 34

Formal Economy

• Registered entities, formal contracts, tax compliance.
• Regulated finance, social security, legal protections.

NODE 35

Formal vs Informal

VS

• Formal: security, protection, regulated wages.
• Informal: less security, irregular income, vulnerable.
• But informal provides massive livelihoods.

NODE 36

Why Informality Exists

• Low productivity, small scale.
• Regulatory complexity, high compliance costs.
• Lack of formal job opportunities.

NODE 37

Formalisation

→

• Bringing activity into formal institutional systems.
• Registration, tax, banking, contracts.
• Improves protection, tax collection, productivity.

NODE 38

Gig Economy

• Short-term, task-based or platform-mediated.
• Ride-hailing, food delivery, freelance.
• Flexibility vs income instability / lacking protection.

NODE 39

Platform Work

• Digital platforms match workers ↔ customers.
• Connects to Realm 19 (Digital Economy).

NODE 40

Self-Employment

• Working for oneself, not as wage employee.
• Shop owner, farmer, freelancer.
• Can be productive entrepreneurship OR subsistence.

NODE 41

Casual Labour

• No long-term arrangement. Paid daily/weekly/by task.
• Employment security is limited.

NODE 42

Wage Employment

• Works for an employer for agreed remuneration.
• Varies in security, hours, benefits, duration.

NODE 43

Labour Mobility

• Movement between firms, sectors, regions.
• Shifts labour to areas of greater demand.
• Barriers: housing, skills, family, transport.

NODE 44

Migration & Labour

• Redistributes from low-demand to high-demand regions.
• Increases income, efficiency, remittances.
• Creates urban pressure, social adjustment costs.

NODE 45

Female Labour-Force

• Depends on edu, wages, childcare, safety, norms.
• Higher participation improves household income & output.

NODE 46

Child Labour

X

• Prohibited/harmful work interfering with education.
• Development replaces it with education & adult decent work.

NODE 47

Labour Laws

• Govern wages, conditions, safety, social security.
• Industrial relations, employment rights.

NODE 48

Social Security

• Protects against old age, disability, illness, injury.
• Pensions, insurance, social assistance.

NODE 49

Occupational Safety

• Risks of injury, illness, unsafe conditions.
• Regulation sets standards, inspection mechanisms.

NODE 50

Equal Pay & Discrim

=

• Discrimination misallocates talent, lowers productivity.
• Anti-discrimination rules seek to reduce distortions.

NODE 51

Market Segmentation

• Market divided (e.g., high-skill formal vs low-skill informal).
• Movement between segments may be difficult.

NODE 52

Decent Work

• Productive employment, fair income, security, rights.
• Equal opportunity. Connects to human development.

NODE 53

Jobless Growth

• Economy grows without generating proportionate employment.
• Capital-intensive prod, automation, sectoral composition.
• GDP growth ≠ automatically enough jobs.

NODE 54

Emp Elasticity of Growth

%ΔY

%ΔE

• Responsiveness of employment to economic growth.
• Higher elasticity = growth produces more employment.

NODE 55

Labour-Informality Cycle

↺

• Low prod → Low earn → Low saving → Small scale.
• → Informal emp → Low skills → Low prod.

NODE 56

Structural Transf

• Labour moves from low-prod agriculture to high-prod mfg/services.
• Requires skills, infra, investment, urbanisation.

NODE 57

Emp & Poverty

→↓POV

• Strongest channel from growth to household welfare.
• Emp → Income → Consumption → Living standards.

NODE 58

Unemployment & GDP

→

• Demand ↓ → Prod ↓ → Labour demand ↓ → Emp ↓.
• Income ↓ → Consumption ↓ → Demand weakens further.

NODE 59

Labour & Inflation

→P↑

• Tight labour markets → Wage pressure ↑ → Costs ↑.
• Potential inflationary pressure.

NODE 60

Wage-Productivity Rel

WAGEPROD

• Long-run real wage growth is sustainable when supported by productivity growth.

NODE 61

Labour Market Info

• Efficient markets need info on vacancies, skills, wages.
• Digital job platforms reduce search costs.

NODE 62

Labour Mismatch

≠

• Unemployed workers + unfilled vacancies simultaneously.
• Mismatch in skills, location, wages, conditions.

NODE 63

Job Creation

→

• Depends on investment, growth, new firms, exports.
• Infrastructure, tech, entrepreneurship, demand.

NODE 64

Entrepreneurship & Emp

• New businesses create direct and indirect employment.
• Connects to Realm 19.

NODE 65

Tech & Employment

→

• Destroys some tasks, creates new tasks/jobs.
• Effect depends on prod, demand, worker adaptability.

NODE 66

Automation

vs

• Replaces specific tasks previously done by workers.
• Productivity ↑, Costs ↓, Demand for certain skills ↓.

NODE 67

AI & Labour Market

🤖

• Automates tasks, augments workers, creates new roles.
• Central question: Which tasks are substituted vs complemented?

NODE 68

Employment Policy

• Skills dev, infra, investment, ease of doing business.
• Labour market institutions, social protection.

NODE 69

Informal → Formal Path

• Informal → Prod ↑ → Business growth → Registration.
• → Formal finance → Formal emp → Social protection.
• Policy design matters; transition isn't automatic.

NODE 70

Master Labour Chain

• Pop → Working-Age → LFPR → Labour Force.
• Emp/Unemp → Wages/Prod → Household Income.
• Consumption/Saving → Living Standards.

NODE 71

Master Unemp Chain

• Econ Conditions → Lab Demand/Supply.
• Matching → Employment OR Unemployment.
• Causes: Frictional, Structural, Cyclical, Seasonal.

NODE 72

Master Formal Chain

• Small Activity → Productivity → Registration + Tax.
• Banking + Contracts → Social Sec → Formal Emp.

NODE 73

Realm Connections

• R02: Factors. R10: Cycles. R11: Real Wages.
• R13: Structural trans. R14: HC/Prod. R15: Agri.
• R19: Gig/AI/Platform Economy.