Labor Market Theory

Labor Market Theory examines how the supply of workers and the demand for jobs interact to determine wages and employment levels. It suggests that employers seek to maximize productivity while workers aim for the best possible wages. Factors like skills, education, and experience influence a worker's value, while economic conditions and company needs shape job availability. When there's a balance between the number of jobs and qualified applicants, the market is considered efficient. However, mismatches can lead to unemployment or underemployment, highlighting the importance of aligning worker skills with market needs.