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. Organized Labor

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

    A concept that describes the amount of demand for labor that ...
  5. Department Of Labor - DOL

    A U.S government cabinet body responsible for standards in occupational ...
  6. Horizontal Merger

    A merger occurring between companies in the same industry. Horizontal ...
RELATED FAQS
  1. According to the law of supply and demand, what is the effect of an increase or decrease ...

    Standard economic analysis shows that taxes of any form, including income taxes, tend to cause deadweight loss in the market. ... Read Full Answer >>
  2. What is the relationship between research and development and innovation?

    Although it's possible to achieve innovation without research and development and it's possible to conduct research and development ... Read Full Answer >>
  3. How is minimum transfer price calculated?

    A company that transfers goods between multiple divisions needs to establish a transfer price so that each division can track ... Read Full Answer >>
  4. How does neoclassical economics relate to neoliberalism?

    While it may be likely that many neoliberal thinkers endorse the use of (or even emphasize) neoclassical economics, the two ... Read Full Answer >>
  5. How does the U.S. Bureau of Labor Statistics calculate the unemployment rate published ...

    The unemployment rate is one of the most closely followed indicators, used by businesses, investors and private citizens ... Read Full Answer >>
  6. What are some of the key shortcomings of how the U.S. unemployment rate is determined ...

    Each month, the Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor, announces the unemployment ... Read Full Answer >>
Related Articles
  1. Economics

    The Economics Of Labor Mobility

    Loosening labor restrictions has both good and bad effects for a country and its workers.
  2. Economics

    What You Need To Know About The Employment Report

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

    Unions: Do They Help Or Hurt Workers?

    Learn the pros and cons of these organizations and how they fit into today's economy.
  4. Economics

    Calculating Income Elasticity of Demand

    Income elasticity of demand is a measure of how consumer demand changes when income changes.
  5. Economics

    Understanding Implicit Costs

    An implicit cost is any cost associated with not taking a certain action.
  6. Economics

    Understanding Diseconomies of Scale

    Diseconomies of scale is the point where a business no longer experiences decreasing costs per unit of output.
  7. Economics

    What Does Capital Intensive Mean?

    Capital intensive refers to a business or industry that requires a substantial amount of money or financial resources to engage in its specific business.
  8. Economics

    What is an Original Equipment Manufacturer (OEM)?

    An OEM is a company whose products are used as components in another company's product.
  9. Economics

    Good Economic News The Cynics May Be Missing

    Headline data about the U.S. economy hasn’t been great, but the economy is actually stronger than it’s getting credit for.
  10. Credit & Loans

    The Best and Worst Countries to Find a Job

    Which countries have the lowest and highest unemployment rates? The answers might surprise you.

You May Also Like

Hot Definitions
  1. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  2. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  3. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  4. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  5. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  6. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!