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Employment is when an individual, the employee, works for wage for an employer. This is the relationship between the employee and employer. The employee is hired to provide labour or specific skills for a job, and in return, the employer pays the employee or worker. This socioeconomic relationship is called wage labour because the employee sells their labour under a contract¹. In terms of economics, the labourer is the supplier of labour and the employer demands the labour. In most countries, there is a minimum wage that is paid to employees in return for work. Also, in many countries, labour unions exist as representations of workers in different industries. Labour unions discuss the wages, conditions, and benefits of their particular industry and can affect the economy by deciding to go on strike.

Employment naturally brings about the topic of unemployment, which as defined by Karl Marx, “it is the very nature of the capitalist mode of production to overwork some workers while keeping the rest as a reserve army of unemployed paupers"². Unemployment is when there are not enough jobs for individuals to fill. Unemployed workers are individuals who are willing to work, able to work and have actively searched for work yet are unable to attain employment. When the unemployment rate increases we see a relationship to the increases of illness, malnutrition, and poor quality of life increases as well.

An important concept in the topic of employment (and unemployment) is cyclical unemployment. This occurs when there is not enough aggregate demand and limited available jobs. When demand falls, production is not needed which means that fewer jobs are needed. Unemployment can still provide some benefit to the economy because it prevents inflation¹. On the opposite spectrum, full employment, in marcoeconomics, is when there is no cyclical unemployment. There are other types of unemployment, which include structural unemployment, frictional unemployment, long-term unemployment, and hidden unemployment.



1. Ragan, Chrisopher. Macroeconomics/Christopher T.S. Ragan, Richard G. Lipsey. – 13th Canadian ed. 

2. Marx, Karl (1863). Theory of Surplus Value. pp. 478


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