Formulation of the problem. The article is devoted to the analysis of labor relations in the context of the cost of labor in a market economy. The aim of the research is to justify the doctrine of choosing social tax policy guidelines, based on the current requirements of democratic transformation in Ukraine. The object of the research is labor relations in terms of market reform of the economy. The methods used of the research: methods of systematization and generalization methods; induction and deduction; interdisciplinary analogy. The hypothesis of the study was the assumption that bringing the salary into line with the cost of labor requires significant improvement of labor relations, the adoption of the new Labor Code in the context of market subjection of industrial relations, which is part of the relationship with labor services. The statement of basic materials. It is substantiated that the labor market is a market of imperfect competition, with dominant positions of employers, because of the important role in regulating prices for labor services is played by the mechanism of collective-contractual regulation of labor relations. In Ukraine, during market reforms, wages are underestimated. The originality and practical significance of the research. In the context of effective economic development, ensuring conditions for qualitative reproduction of human capital, achieving compromises in society requires a radical improvement of the nature of labor relations. This improvement involves the adoption of a number of legislative decisions. This is a legislative solution to the problem of subjection of industrial relations as a market form of economic development and addressing issues of effective employment. Subjection of industrial relations is a process of transformation of participants of economic activity into subjects of a modern market economy, which should be equal, have rights, social duties and mechanisms of protection. Conclusions of the research. In the organization of economic activity, the practice of economic activity, as well as in other spheres of society life should actively use the conceptual development of a positive and normative economic theory to create a partnership model of labor relations on a market basis. The biggest disadvantage of the market reform of the Ukrainian economy was the ignoring at the level of legislation of the conclusions and formulated requirements of economic theory, which caused a significant understatement of wages in relation to the cost of labor and caused the emergence of a number of negative phenomena.
Behavioral economic theory in explaining social and labor relations
