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Examples in this area can range from fire protection to cable TV, anywhere along the lines of the general characteristics of this category of goods.
In terms of the labor market and labor market equilibrium, the functionalities are similar to all of the other market, with supply and demand on the market working towards establishing the right price and quantity for the respective resource (in this case, the labor force). An exceeding supply of workers on the labor market amounts to a lower price for that respective resource, as well as to potential unemployment. Realistically, this may also lead to unemployed, without the market providing the right amount of positions for that respective category of workers. When there is an excess in demand, the wage goes up, because those workers are more required on the market, in the conditions of a shortage for that respective category of individuals.
The main different from other market is that the supply curve does not necessarily show the available workers in a certain industry at a certain time, but rather the total amount of workers who are willing to work for a certain wage in a certain industry. This is somewhat smaller than the actual total amount of workers...
With the IT industry, for example, the wage tends to be rather high, mainly because this is a very specific industry, requiring a large amount of technical studies and a smaller number of those who actually can perform these. Other jobs with an excessive amount of workers prepared for that field will tend to have a lower pay, such as the metallurgical industry.
With the equilibrium on the labor market, one can also introduce the concept of natural unemployment rate, in which the price and wage decisions can be consistent. The price here is fixed as the intersection of supply and demand, while the wage is the actual decision of management as the price it will agree to pay the respective worker. The two are only equal in an ideal situation: economically, management will want to pay the worker somewhat less than the actual theoretical price, while the workers' union will invoke a higher wage over the equilibrium price.
Bibliography
1. Mas-Colell, Andreu; Whinston, Michael; Green Jerry. 1995. Microeconomic Theory. Oxford University Press.
2. Gravelle, Hugh. 2004. Microeconomics. Pearson Education.
Bibliography
1. Mas-Colell, Andreu; Whinston, Michael; Green Jerry. 1995. Microeconomic Theory. Oxford University Press.
2. Gravelle, Hugh. 2004. Microeconomics. Pearson Education.
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