Background
An employee is an individual who is hired by another individual or a business organization to perform work in exchange for compensation, typically wages or a salary. This work relationship is governed by a contract of employment which outlines the terms and conditions under which the employee performs their duties. This contract often includes details such as job responsibilities, working hours, pay rate, and other benefits.
Historical Context
Historically, employment structures have evolved significantly. In pre-industrial societies, work was primarily agricultural or artisanal. Industrialization brought about an increase in factory jobs, leading to the modern concepts of employee and employer. Labor laws and employment rights have further shaped this relationship, offering protections and benefits to employees.
Definitions and Concepts
An employee is characterized by:
- Working for wages or salary.
- Having a contract that specifies the terms of employment.
- Being subject to the direction and control of the employer.
The employer, on the other hand, is responsible for providing the agreed compensation and adhering to labor laws which often include fair treatment and protection of employees’ rights.
Major Analytical Frameworks
Classical Economics
Classical economists see employment largely in terms of supply and demand in the labor market. Employees provide labor, an essential factor of production, in exchange for wages.
Neoclassical Economics
Neoclassical economics views the employee-employer relationship as a contract between rational agents. Compensation is seen as determined by the marginal productivity of the employee.
Keynesian Economics
Keynesian economics emphasizes the aggregate demand for goods and services in determining levels of employment. Policies to reduce unemployment often focus on boosting demand via fiscal and monetary policies.
Marxian Economics
In Marxian economics, employees are considered the proletariat who sell labor power under capitalism. The focus is on the exploitation of labor and the potential for class conflict.
Institutional Economics
Institutional economics examines the role of institutions (laws, norms, and cultures) that shape the employer-employee relationship. Employment terms and conditions are seen as influenced by these larger institutions.
Behavioral Economics
Behavioral economists study how psychological factors affect how employees perform their duties and how employers manage their workforce. This explores concepts such as motivation, incentives, and organizational behavior.
Post-Keynesian Economics
Post-Keynesian economists focus on income distribution and its effect on consumption and employment levels. They argue for government intervention to maintain full employment.
Austrian Economics
Austrian economics views employment through the lens of entrepreneurship and individual choice. The emphasis is on market dynamics and the importance of voluntary exchange.
Development Economics
In development economics, employment patterns are analyzed as a critical factor in economic development, helping to understand labor migrations, informal employment, and skill development.
Monetarism
Monetarists focus on the role of government policy, specifically monetary policy, in influencing employment levels. They highlight the connection between inflation, money supply, and employment.
Comparative Analysis
Different schools of economic thought offer varied perspectives on employment and the role of employees in the economic system. While classical and neoclassical frameworks focus on efficiency and market forces, Keynesian and Post-Keynesian frameworks highlight the significance of demand and income distribution. Marxian and Institutional frameworks offer critiques and alternative views on labor relations and the role of power and institutions.
Case Studies
Case studies may illustrate differences in employer-employee relationships across sectors or geographies. They may also show how economic theories translate into practice with examples from various countries and industries.
Suggested Books for Further Studies
- “Economics for Humans” by Julie A. Nelson
- “Work Anxiety in Academia: Understanding the Effects of Neoliberalism” by Fred Mishra
- “Labor Economics” by George J. Borjas
- “Capital” by Karl Marx
- “The Living Wage” by Tony Fitzpatrick.
Related Terms with Definitions
- Employer: An individual or organization that hires employees.
- Wages: Financial compensation paid to an employee for their work.
- Salary: A fixed regular payment, typically paid on a monthly or biweekly basis but often expressed as an annual sum.
- Contract of employment: A legally binding agreement between an employer and an employee outlining the terms and conditions of employment.
- Self-Employed: An individual who works for themselves and is responsible for their own income and taxes.
- National Insurance: A system of compulsory payments by employees and employers in the UK that fund state pensions and other benefits.
- Income Tax: Tax levied by governments directly on income, especially an annual tax on personal income.
