economic modeling of labor markets

Economic modeling of labor markets uses simplified frameworks to analyze how workers and employers interact. It considers factors like wages, job availability, and worker skills to understand how employment levels are determined. Models typically assume that workers decide where to work based on wages and job prospects, while employers set wages and hiring based on productivity and costs. By analyzing these interactions, economists can predict how changes like minimum wage increases or economic shifts affect employment, wages, and overall labor market health. These models help policymakers understand potential impacts of labor-related decisions and policies.