Demand For Labor

AAA

DEFINITION of 'Demand For Labor'

A concept that describes the amount of demand for labor that an economy or firm is willing to employ at a given point in time. This demand may not necessarily be in long-run equilibrium, and is determined by the real wage, firms are willing to pay for this labor, and the amount of labor workers are willing to supply at that wage.

INVESTOPEDIA EXPLAINS 'Demand For Labor'

Demand for labor increases market wages and more workers enter the market. But this higher cost of labor will mean that employers will use less labor because it's more expensive.

Assuming there are a large number of employers in a region, or that workers are highly mobile geographically, the wages that a company will pay workers is dependent on the competitive market wage for a given skill set. This means that any company is a wage taker, which is simply another way of saying companies must pay competitive wages in order to obtain workers.

RELATED TERMS
  1. Job Footprint

    The scope and range of an employee's duties while under a company's ...
  2. Resume

    A one to two page formal document that lists a job applicant's ...
  3. Lump Of Labor Fallacy

    The assumption that the quantity of labor required in an overall ...
  4. Job Market

    A market in which employers search for employees and employees ...
  5. International Labor Organization ...

    A United Nations agency that strives to serve as a uniting force ...
  6. Geographical Labor Mobility

    This refers to the level of freedom that workers have to relocate ...
RELATED FAQS
  1. How are labor demand forecasts made in human resources planning?

    Human resources planning can use qualitative and quantitative approaches to forecasting labor demand. Quantitative methods ... Read Full Answer >>
  2. How can a company control its holding costs?

    A company can control its holding costs through efficient management of its inventory and the efficiency of its overall logistics ... Read Full Answer >>
  3. What is the difference between the cost of capital and the discount rate?

    The cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount ... Read Full Answer >>
  4. What economic factors affect the performance of the consumer packaged goods industry?

    Three of the primary economic factors that influence the performance of companies in the consumer packaged goods (CPGs) industry ... Read Full Answer >>
  5. How is the economic order quantity model used in inventory management?

    The economic order quantity model is used in inventory management by calculating the number of units a company should add ... Read Full Answer >>
  6. What risks does a business owner face under a business structure with unlimited liability?

    The risks that a business owner faces under a business structure with unlimited liability are literally unlimited, but they ... Read Full Answer >>
Related Articles
  1. Economics

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  2. Economics

    How Education And Training Affect The Economy

    Education and training benefit not only the worker, but also the employer and the country as a whole.
  3. Economics

    Globalization: Progress Or Profiteering?

    Proponents of globalization argue that it helps the economies of developing nations and makes goods cheaper, while critics say that globalization reduces domestic jobs and exploits foreign workers. ...
  4. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  5. Economics

    Unions: Do They Help Or Hurt Workers?

    Learn the pros and cons of these organizations and how they fit into today's economy.
  6. Bonds & Fixed Income

    Abenomics Vs. Quantitative Easing: Which Works Best?

    Abenomics and QE are versions of extraordinary stimulus measures initiated by the Japanese government and the U.S government, respectively.
  7. Economics

    West Coast Vs. East Coast Economy

    The East’s focus on finance and banking contrasts the West’s drive toward technological innovation. But one thing is clear--each knows it needs the other.
  8. Investing Basics

    What is a Nominal Value?

    The nominal value of a security, such as a stock or bond, remains fixed for the duration of its life.
  9. Economics

    Explaining the Human Development Index

    The Human Development Index (HDI) is a metric developed by the United Nations to take the emphasis off economic growth and focus on human wellbeing.
  10. Fundamental Analysis

    Calculating Future Value

    Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.

You May Also Like

Hot Definitions
  1. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  2. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  3. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  4. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  5. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  6. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
Trading Center