Laborintensiveness

Laborintensiveness, or labor intensity, measures how much production relies on human labor relative to other inputs such as capital, energy, and materials. A highly labor-intensive process uses a large share of direct labor hours and labor costs compared with capital. In contrast, capital-intensive processes rely more on machinery and automation. Measurement often uses indicators like the labor share of production costs or labor hours per unit of output; thresholds for what counts as labor-intensive vary by sector and country.

Determinants of labor intensity include technology, access to capital, workforce skills, regulatory constraints, and the scale of operation. Globalization can shift intensity through outsourcing, while process redesign and automation reduce labor needs. The classification of a given activity as labor-intensive can change over time as technology and capital availability evolve.

Implications and examples: Higher labor intensity can support employment and wage bargaining power but increases exposure to wage changes, strikes, and demand volatility. It may limit scalability and productivity gains if labor remains the bottleneck; reducing labor intensity often requires capital investment and can involve worker displacement. Typical labor-intensive sectors include agriculture, construction, hospitality, and many textile industries, whereas advanced manufacturing and some mining operations tend toward capital intensity, though exceptions exist where skilled labor drives value.