Labor market is a place of interaction between employers and workers in a supply-demand fashion. Here, demand is the firm’s demand for labor and the supply is the worker’s supply of labor. It may be in terms of units or hours and is often represented in hours.
Employers strive to hire the best workers while workers strive for a completing/ satisfying job. This market is influenced wages, unemployment ration. The more the unemployment, lesser is the bargaining power of a worker and the lesser the unemployment, the more is the bargaining power of the worker, hence more is the wage.
In a practical market scenario, a minimum wage is set due to which natural unemployment is created. This may be due to the minimum set standard of living, labor unions, government rules etc.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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