you can consider work in so many different ways as a chore a passion a challenge a headache a money earner or a pastime etc generally speaking economists view work as a market in three minutes you'll know everything about the labor market or just about imagine a tiny country that has 10 companies and 100 inhabitants of working age out of these hundred 56 are part of the labor force in other words they have a job or a seeking one together our 10 companies and 56 strong labor force therefore constitute a market where you can buy or sell labor [Music] like any proper market the labor market is based on supply that's to say the workers and demand in other words the companies since skilled workers are more productive than unskilled ones companies are prepared to pay them more but the labor market's extremely segmented a shoe factory is hardly likely to take on auto engineers no matter how skilled they may be just like a car plant would never hire an astronaut and then the price of labor also depends on circumstances in a situation of full employment there is a shortage of available workers so wages rise conversely in periods of high unemployment there is an abundant supply of labor so wages fall but let's get back to our mini country where a large part of the labor force works in our podium mines miners were on good wages until the day when synthetic garbonium was invented all of a sudden output at the mines fell sharply unemployment soared and five people became unemployed or almost nine percent of the labor force our miniscule jobs market is swamped by these five miners seeking work but whose skills are now obsolete so they accept jobs with very low wages and become the working poor i.e people who have a job and yet struggle to make ends meet faced with this unexpected situation the government introduces a minimum wage the lowest salaries rise significantly which helps the poorest to escape the poverty trap the problem is that this sudden rise in labor costs threatens the competitiveness of businesses if they want to avoid price rises they'll have to make cost savings for instance by replacing men with machines or relocating production to places where labour is cheaper the minimum wage improves life for some but risks putting others out of work what's the best solution now let's imagine there are three minuscule countries facing the same problem rather than just one what should be done in country number one the minimum wage is scrapped and the market is left to set labor costs on its own the wages of the least skilled workers drop significantly this is the cheapest solution for the community but it means accepting a two-tier society where the poor struggle to access health and education etc [Music] to understand what's going on in country number two it must be kept in mind that a salary includes social security contributions that help fund unemployment insurance as well as the health system and pensions in country number two the government keeps the minimum wage but does away with social security contributions on low wages thanks to this tax break the cost of unskilled labor falls for companies without any decline in the purchasing power of employees in short everyone's happy the problem with solution number two is its cost any contributions not paid by companies have to be covered by the state and ultimately by taxpayers [Applause] in country number three the government decides to increase the productivity of unskilled workers through the funding of training schemes this is expensive for employees companies and the state but it allows workers and companies to adapt to the technical developments in their professions so there you are time for a guessing game which solution should be chosen one two or three in the real world these three solutions coexist and have respectively been adopted by the united states france and denmark which is the best one for economists the jury's still out it's particularly hard to assess the long-term effects of public policies what figures should we take into account the unemployment rate long-term unemployment productivity and then looking beyond the figures these different solutions result from different national histories economic models and political decisions since it plays a particularly important role for society and individuals the labor market is not uniform in nature it varies considerably from one country to the next ultimately it's a kind of market right but it's also a lot of other things besides [Music] you