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Economics

Factors Affecting the Demand for Labour

An Overview of The Demand for Labour

This post will help you to understand the idea that labour is a derived demand and the factors that are associated with and affecting the demand for labour, as part of your Prelim Economics course. The demand for labour is influenced by the level of economic activity, the productivity of labour and the relative cost of labour when compared to capital inputs.

Unlike other markets, the labour market is a little different. Firms demand in the labour market, whilst consumer supply the labour market. Thus, the demand for labour is influenced by firm-specific influences.

The videos below explain this in more detail.