Abstract.In recent years, labour economics has been the area of study of most interest to economists, both from the theoretical and practical perspectives. The new field of labour microeconomics and the resultant new approaches that have arisen are a fundamental part of what has recently been called ‘microeconomic foundations’. Despite the newness of this topic, recent developments are in fact the result of phenomena recognized throughout the history of economic thought.This paper begins by analyzing the historical and theoretical origins of labour economics, and provides an overview of labour economics theory during the 1960s. 1970s and 1980s. It goes on to examine the relation between the labour market and technological innovation, and labour policy measures at the microeconomic and macroeconomic levels. Finally, it underscores the need for a theoretical construct that sets Keynesian and neoclassical explanations of unemployment in the same framework as demographic, social, institutional, time and economic fact