Labor Market Flexibility

AAA

DEFINITION of 'Labor Market Flexibility '

Firms' ability to make changes to their workforce in terms of the number of employees they hire and the number of hours worked by the employees. Labor market flexibility also includes areas such as wages and unions. A flexible labor market is one where firms are under fewer regulations regarding the labor force and can therefore set wages (i.e. no minimum wage), fire employees at will and change their work hours. A labor market with low flexibility is bound by rules and regulations such as minimum wage restrictions and requirements from trade unions.

INVESTOPEDIA EXPLAINS 'Labor Market Flexibility '

Supporters of increased labor market flexibility argue that it leads to lower unemployment rates and higher GDP. However, its opponents claim that flexibility puts all the power in the hands of the employer, resulting in an insecure workforce.

RELATED TERMS
  1. Cost Of Labor

    The sum of all wages paid to employees, as well as the cost of ...
  2. International Labor Organization ...

    A United Nations agency that strives to serve as a uniting force ...
  3. Department Of Labor - DOL

    A U.S government cabinet body responsible for standards in occupational ...
  4. Organized Labor

    An association of workers united as a single, representative ...
  5. Demand For Labor

    A concept that describes the amount of demand for labor that ...
  6. Marginal Rate of Technical Substitution

    The rate at which one factor has to be decreased in order to ...
Related Articles
  1. The Economics Of Labor Mobility
    Economics

    The Economics Of Labor Mobility

  2. What You Need To Know About The Employment ...
    Economics

    What You Need To Know About The Employment ...

  3. Unions: Do They Help Or Hurt Workers?
    Economics

    Unions: Do They Help Or Hurt Workers?

  4. Examining The Phillips Curve
    Economics

    Examining The Phillips Curve

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center