Macroeconomic techniques look at the interrelations between the labour market, the goods market, the money market, and the foreign trade market. Microeconomic techniques study the role of individuals and individual firms in the labour market. Labour economics can generally be seen as the application of microeconomic or macroeconomic techniques to the labour market. Macro and micro analysis of labour markets 6 Personnel economics: hiring and incentives.1 Macro and micro analysis of labour markets.A labour market is also different from other markets in that workers are the suppliers and firms are the demanders. the work cannot be separated from the person who does it). Labour is unique to study because it is a special type of good that cannot be separated from the owner (i.e. Some theories focus on human capital, or entrepreneurship, (which refers to the skills that workers possess and not necessarily the actual work that they produce). It is conventionally contrasted with other factors of production, such as land and capital. Labour is a measure of the work done by human beings. Labour markets are normally geographically bounded, but the rise of the internet has brought about a 'planetary labour market' in some sectors.

These patterns exist because each individual in the market is presumed to make rational choices based on the information that they know regarding wage, desire to provide labour, and desire for leisure. Labour economics looks at the suppliers of labour services (workers) and the demanders of labour services (employers), and attempts to understand the resulting pattern of wages, employment, and income. Labour markets or job markets function through the interaction of workers and employers. Because these labourers exist as parts of a social, institutional, or political system, labour economics must also account for social, cultural and political variables. Labour is a commodity that is supplied by labourers, usually in exchange for a wage paid by demanding firms.

Labour economics, or labor economics, seeks to understand the functioning and dynamics of the markets for wage labour.

Important of labour supply