Factors affecting labor supply and demand

Factors affecting labor supply and demand

The availability and qualification of workers affects both labor supply and demand. This can be illustrated from the given example like; shortage of nurses in a given region. It affects the supply of qualified nurses to fill the available ranks in the hospitals in that region. The pay is affected by the shortage of nurses.

The salaries rise when the number of the nurses is low and more labor can be achieved. Labor supply and demand is also affected by the economy and the demands that the customers have for the products.

The economy that is slow moving and the less demand for services or the goods, affect the number of workers hence the amount of labor. When the economy is strong and the demand for the goods and services fare high, there will be creation of jobs. The number of producers determines the surplus of labor.

When there are few producers, the labor supply decreases. More competition normally means a decrease in the labor supply in a given business, while fewer results in a chance for more surpluses to be in a given company. Labor supply and demand are dependent on various factors. Scarcity of the key human resources can produce normally low labor demand. Demand for a product is affected by various factors such as, the income of consumers. An increase in the consumer income leads to an increase in the demand for the good. The future price expectations affect the demand for a given good.

If the consumers expect the prices of the good to decrease in the future, they will decrease their purchases and if they expect the price to increase they will increase their purchases. Competition from the product’s substitutes affects the demand of a good. The company’s requirements and expectations also affect the labor it can receive. If they require highly qualified workers, then the labor that they will receive will be less as few people will apply. If the prices of the substitute and complement goods decrease, the demand decreases that in turn affects the number of workers in a given organization. An increase in the consumer income can affect the demand of a good negatively or positively. An increase in the income causes the demand of normal goods to increase and inferior goods to decrease.

Work cited;

Gerald R. 2003 “Mastering Real Estate Principles” Publisher Dearborn Real Estate,