Factors affecting labour:
Supply of labour:
- Population shift (increased immigration)
- Changes in pay
- Education level
- working conditions
Demand for labour:
- output of the firm
- economic growth
- employee productivity
Labour market Equilibrium:
Equilibrium Wage () is created by the interaction of the demand and supply of labour being equal.
Practice exam question:
Describe three conditions that could increase the demand for labour. Explain how an increase in the demand for labour will affect the wage rate and the size of the labour force.
An increase in the demand for labour can be caused by a firm looking to expand production output,