Labor Demand

Definition

Labor demand refers to the quantity of labor that employers are willing and able to hire at different wage rates in a given market. It is determined by factors such as the productivity of labor, the price of output, and the availability of other inputs.

Related terms

Wage Rate: The amount of money paid per unit of time (usually per hour) for labor services.

Marginal Productivity: The additional output produced by each additional unit of input (labor).

Substitution Effect: When employers respond to an increase in wages by substituting capital or technology for labor, resulting in a decrease in labor demand.