Labour, in economics, effort expended to secure economic benefits. It is one of the three leading factors of production, the other two being land (natural objects) and capital.
In industry, labour has a great variety of functions, which may be classified as follows: production of raw materials, as in mining and agriculture; manufacturing in the widest sense of the word, or transformation of raw materials into objects serviceable to humans; distribution, or transference of useful objects from one place to another, as determined by human needs; operations involved in the management of production, such as accounting and clerical work; and services such as those rendered by doctors and teachers.
Many economists distinguish between productive and unproductive labour. The former consists of those kinds of exertion that produce utility embodied in objects. Unproductive labour, like that of the musician, is useful but does not add to the material wealth of the community.
As a result of the Industrial Revolution at the end of the 18th century, most workers were employed in the factory system and similar practices. These workers were not protected from economic exploitation or from the consequences of illness, disability, or unemployment. In the early decades of the 19th century, increasing opposition to the social costs of unrestrained laissez-faire capitalism caused the development of socialism, as well as movements against such abuses as child labour. Workers began to form trade unions and cooperatives that enabled them to participate in many types of political activities and to protect themselves by political and economic means. Laws for the regulation of labour testify to the strength and success of modern organized labour, just as collective bargaining and the closed-shop agreement reveal its shortcomings. Industrial relations is now integral to modern economic practice.