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What is Labor Mkts & Wage?
The wages of labor in a competitive labor market are decided by the demand and supply of labor. Neither workers nor firms hiring for labor can actually impact the wages, which are the price of labor, in a competitive scenario. Naturally, the wages are solely decided by the demand and supply.
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Why is it important?
In a competitive labor market, the costs of labor are decided by the equilibrium of supply and demand of labor. The rate of wage at which the supply and demand of labor equals is known as the market equilibrium wage and it is the prevailing wage rate in this type of competitive labor market.
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