Definition of labor in economics:

Labor is the second factor of production. Also it plays a crucial role in the production process.

“Any mental or physical work done for the sake of reward is known as labor”.

Characteristics of Labor:

Following are the few characteristics of labor:

Labor cannot be Stored:

Labor cannot store his power to utilize it in his old age.

Difference in Abilities:

Labors can be different in their abilities as well as in their efficiency. More efficient will get more wage.

Weak Bargaining Power:

As labor cannot be stored so the labor has less bargaining powers that’s why they agree for work even on fewer wages.

Labor cannot be separated from Laborer:

Labor is a skill of laborer, so it cannot be separated from laborer.

Factors Influencing Labor:

Following are the few factors which can affect the efficiency of labor:

Physical Health:

Physical health of the labor is very important factor which can cause very bad effects on the efficiency of labor.


The efficiency of the labor also depends on the working skill of the labor.

Moral Values:

Moral values can also affect the productivity; more loyal and honest labor will work harder which will cause a good effect on the productivity of the good.

Working Environment:

Better working environment will cause good effects on laborers and can increase the productivity of the goods

Level of Wages:

If the owner of business is giving high wages to his/her labors than the laborer will work more efficiently.

Political Condition:

Political conditions of the region can also cause good or bad effects on the production process (laborer).


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