The term 'labour', in Economics is the human physical and mental effort used in the production process. It includes the work of skilled or unskilled, professional or amateur; salaried or non-salaried persons, etc., who put their efforts mentally or bodily in return for some reward . The reward may be paid in cash or in kind or in both.

The unit of time for the payment of remuneration may be day, a week, a month or a year.

Labour is the effort necessary to satisfy human needs. It is one of the three leading elements in production, the other two being land (natural objects) and capital.

In industry, labor 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 personal services such as those rendered by physicians and teachers.

Many economists distinguish between productive and unproductive labor. The former consists of those kinds of exertion that produce utility embodied in natural objects. Unproductive labor, 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 large factories and similar undertakings. 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, increasingly prevalent ideas of freedom caused great changes in the conditions of labor. Workers began to form trade unions and cooperative societies 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 labor are now intended not to fix wages as formerly, but to protect the workers.