Human resource economics is a term that is used to describe the collective strategies and approaches that seek to address the utilization of labor within the workforce and how that utilization has an impact on the greater economic well-being of a nation or other locality. Typically, this type of economics considers the impact of employee turnover, unemployment, and even the role of labor unions and governmental policies on the efficient utilization of human resources. The general idea of human resource economics is to understand factors that interact to help grow and sustain the use of labor within the workplace to the mutual benefit of the employer and the employee, while also measuring the impact of that relationship on the economy in general.
Using human resource economics in terms of function within a company usually involves attempting to match the skills sets required for a particular job position with the abilities of a specific employee. This process calls for evaluating the talents of the employee, relating them to the work available and determining if both the employer and the employee will benefit from the placement. In the best possible scenario, the employee is happy and looks forward to coming to work, taking pleasure in what is accomplished during the workday. At the same time, the employer is satisfied with the productivity of the employee and there is no need to spend time, money, and effort attempting to replace that employee.
On a larger scale, human resource economics will often focus on assessing employment issues that impact the greater economy. This can mean addressing issues of unemployment in one or more industries, and how those figures impact consumer spending and general stimulation of the economy. Attention to the impact of employment laws, whether positive or negative, is also part of this process. Even the role of unions in protecting the rights of employees and how those regulations impact the ability of employers to sustain a business operation over the long term are considered as part of the economic aspects of human resources strategies and initiatives.
The scope of human resource economics seeks to understand and manage the effective usage of labor so that all parties involved benefit. This means job placement that meets the needs of both employee and employer, while also providing opportunities for growth that benefits both parties in the future. From there, the impact of those efforts on the stability of the economy are taken into consideration, which in turn helps to enact legislation that amends current labor practices or possibly paves the way for implementation of new practices that ultimately benefit everyone involved with that economy.