Labour economics seeks to understand the functioning of the market for labour. Labour markets function through the interaction of workers and employers. Labour economics looks at the suppliers of labour services (workers), the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income.
''Man is so made that he can only find relaxation from one kind of labor by taking up another.''
It is an important subject because unemployment is a problem that affects the public most directly and severely. Full employment (or reduced unemployment) is a goal of many modern governments.
Anatole France, The Crime of Sylvestre Bonnard
==Real Wage==
French novelist (1844 - 1924)
The real wage describes the quantity of goods that the worker gets for a number of hours of labor. the real wage is the nominal wage adjusted to the level of inflation. It determines how much labor workers will want to supply in the economy.
==Factors that Influence Real Wage==
''I like work: it fascinates me. I can sit and look at it for hours.''
==Income Effect==
Jerome K. Jerome, "Three Men in a Boat", 1889
When wages increase, the income effect states that a worker feels wealthier and that he needs to work less to have the same income. The effect will result in the laborer placing a greater demand on goods, services, and non-market activities so that he/she will cut down on supply of labor.
==Substitution Effect==
British humor writer (1859 - 1927)<center>[[Image:Grad.gif|thumb|Description]] </center>
==Gender Differences==
<center>'''Authors:'''</center>
Men and women are observed to react in a different way to changes in wages. For men, the substitution effect dominates, while for women, the income effect outweighs the substitution effect. In general though, we assume that substitution effect dominates the economic behavior of people. In this project, we are going to analyze the causes, effects and consequences of this generalization.
