Econ Grapher

Employment

What is Employment?
Employment is a contract between two parties (the employer and the employee). In basic terms the employer engages the employee to render services to the employer in exchange for some form of compensation. In economic analysis employment typically refers to national statistics on employment levels. For example how many people are in full time employment, how many people are in part time employment, and various related details such as gender, type of work, hours worked, wages, etc. Employment is often examined in reference to a previous period i.e. change in employment. A key example is nonfarm payrolls in the US, which is a widely watched metric on the US labour market.

How does it relate to Markets?
Employment is inextricably linked with the state of an economy, employment can be an ex post indicator; i.e. a symptom of where the economy is e.g. falling employment is symptomatic of a recession. But it can also be a leading indicator given its impact on consumer confidence, the housing market, consumer credit, retail sales; and by extension the wider economy i.e. aggregate demand levels. Thus it should be no surprise that employment numbers are closely monitored by market participants and will often have significant impact. Clearly improving numbers are generally positive, and falling employment is generally negative (unless it is accompanied by significant productivity gains). One caveat would be that if employment was growing too fast, it could have implications for the rate of inflation in an economy.

Sources and further reading:
Economics Web Institute - Employment
Library of Economics and Liberty - Employment and Unemployment
Encyclopedia Britannica - Full employment
Investopedia - Non-farm payrolls
Econ Grapher Encyclopedia - Unemployment

Graph Library:
Metric - Employment

Original Source: http://www.econgrapher.com/encyclopedia-employment.html

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