Labor Markets

Labor markets, the process that matches jobs and workers, are a primary component of local economies and therefore have enormous influence over the health and welfare of communities of all types and sizes. Labor markets can be studied at any spatial scale, from local community to transnational global exchange, and everything in between. However, communities remain a fundamental component for understanding labor market processes, since labor markets and communities are linked in a dynamic relationship. Markets are embedded in and shaped by local communities, and they define the nature of opportunities in a local area. Ultimately, the historical development of local labor markets has a major impact on all aspects of community life.

The term market has its roots in trade or exchange. In both popular use and economic theory, a market is the exchange of goods or services, whether of commodities, ideas, or labor. A labor market is the exchange of labor power—work—for some form of compensation, typically money wages in modern economies, although possibly other goods or services in part or whole.

Although the discipline of economics has long claimed jurisdiction over the study of market exchanges, including labor markets, the importance of noneconomic factors and the broad social, political, and cultural implications of market structures and processes increasingly make market exchanges the focus of other social scientific disciplines. Sociologists, for example, have a long tradition of analyzing labor markets as outcomes of a wide variety of institutional practices and as the sources of individual and collective inequalities and opportunities. Social scientists working in this tradition assume that labor markets are embedded in a larger social context that includes the rules, regulations, and legal framework specific to regulating employment processes in a particular social system, as well as other institutions and social relationships. These include families, communities, and social networks. Communities are particularly important since they provide the context and form an outcome of labor market processes and are widely recognized as an important site of social action.