BROWSE

Labor Intensive

Definition

Labor intensity is the relative proportion of labor used in a process. Its inverse is capital intensity.

What is 'Labor Intensive'

Labor intensive refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services; the higher the proportion of labor costs required, the more labor intensive the business.

Explaining 'Labor Intensive'

Labor-intensive industries include restaurants, hotels, agriculture and mining. Advances in technology and worker productivity have moved some industries away from labor-intensive status, but many still remain.

Labor-Intensive Industries

A prime example of a labor-intensive industry relates to agriculture, especially those companies involved in the cultivating of food items that must be picked with minimal damage to the plant as a whole, such as fruit from fruit trees. The construction industry is considered labor intensive as most of the required work is hands-on. Even with the use of certain tools, a person must be involved with the vast majority of the work. Many positions considered part of the service industry are considered labor intensive. This includes positions within the hospitality industry and the personal care industry.

Labor Costs

Labor costs encompass all of the necessary funds used to secure the human capital necessary to complete the work. This can include funds directed toward base wages along with any benefits that may be supplied. Labor costs are highly flexible, allowing the business to adjust based on current demands and overall affordability.

Capital Costs

Capital costs most often relate to the equipment necessary to meet production needs. This can include machinery in a manufacturing environment, vehicles for transporting goods or other materials, and the facilities in which the work is done. Capital costs are often fixed in nature, limiting the amount that can be changed on a day-to-day basis.


Further Reading


Flying Geese within Borders: How China Sustains Its Labor-intensive Industries?[J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200909002.htm'>PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Promoting the Growth of Medium and Small-sized Enterprises through the Development of Medium and Small-sized Financial Institutions <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200101001.htm' />Promoting the Growth of Medium and Small-sized Enterprises through the Development of Medium and Small-sized Financial Institutions [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-JJYJ200101001.htm'>PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

A fire sale without fire: an explanation of labor-intensive FDI in ChinaA fire sale without fire: an explanation of labor-intensive FDI in China
papers.ssrn.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Financial and industrial structure with agencyFinancial and industrial structure with agency
academic.oup.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

A fire sale without fire: An explanation of labor-intensive FDI in ChinaA fire sale without fire: An explanation of labor-intensive FDI in China
www.sciencedirect.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Labor unemployment risk and corporate financing decisionsLabor unemployment risk and corporate financing decisions
www.sciencedirect.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Immigration vs. outsourcing: effects on labor marketsImmigration vs. outsourcing: effects on labor markets
www.sciencedirect.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Employment Effects of Labor-intensive Manufactures <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-GGYY200507002.htm' />Employment Effects of Labor-intensive Manufactures [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-GGYY200507002.htm'>PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …

Firm characteristics, total quality management, and financial performanceFirm characteristics, total quality management, and financial performance
www.sciencedirect.com [PDF]
… shall move towards to their comparative advantages and thus the labor-intensive industries shall be … Economics,CASS,Beijing 100732,China);THE GROWTH OF THE LABOR PRODUCTIVITY IN … of Schumpeterian Economic Theory[J];Journal of Finance and Economics;2008-02 …



Q&A About Labor Intensive


What does "labor costs" encompass?

Labor costs encompass all necessary funds used to secure human capital necessary for completing work. This includes base wages and benefits provided by employers.

What does "capital costs" refer to?

Capital costs refer to equipment needed for production purposes in order to meet demand and overall affordability. This includes machinery in manufacturing environments, vehicles for transporting goods, and facilities where work is done."

What is labor intensive?

Labor intensive refers to a process or industry that requires a large amount of labor to produce its goods or services.

What are some examples of industries that are considered labor intensive?

Agriculture and construction are both considered labor-intensive industries because they require a lot of human intervention to complete tasks.

How can you measure the degree of labor intensity?

You can measure the degree of labor intensity by measuring the proportion of capital required to produce the goods or services. The higher this proportion, the more labor-intensive it is.