Differentiation between market structures

¶ … commodity or resource (such as technology or capitals), the human resource is traded within its specific marketplace and is subjected to the rules of demand and offer. At a general and most simplistic level, the equilibrium on the labor force market is attained when the offer of labor force equals the demand for labor force. Yet, this situation is only achieved within perfect markets. And since perfect markets are virtually inexistent within today's national and international backgrounds, labor force equilibrium is never achieved.

Yet, several situations occur in which the imbalance observed is negligible and the resulting labor market could be considered stable and in equilibrium. As a general rule however, the labor force market is governed by the same rules of demand and supply which are common within political economy, namely:

(1) When the supply of labor force increases, the wages offered by employers decrease -- this situation is best observed now, during the internationalized economic crisis when the number of individuals seeking employment is significantly higher than the number of available positions. This state of equilibrium reveals a shortage of labor force demand.

(2) When the demand for labor force surpasses the supply of labor force, the wages (and overall salary packages) offered by employers increase. Such an imbalance is generated by the lack of labor force supply and it does not generally manifest at the level of the entire economy, or it can manifest at this level, but only is specific circumstances. Two relevant examples of this imbalance are constituted by the it industry where software developers are continually sought; and by the developing countries where significant proportions of the populations have immigrated to better paid regions, leaving the home country in a labor insufficiency.

Aside these two situations, imbalances in the labor force market occur due to other specific situations. For instance, in cases of monopoly, when a single employer is hiring most participants to the labor force, the supply for human resources remains the same, but the supply of jobs decreases. Additionally, another imbalance is generated by the reduced bargaining power of the employees, who are no longer able to switch jobs. Additionally, when a monopoly is formed, the employees are rarely presented with the opportunity / possibility of forming or joining unions.

In an oligopoly situation, the situation is similar to a monopoly, with the specification that the employees are better able to negotiate terms and conditions as they have the ability to switch employers. An oligopoly is formed when the employment power -- or the demand for labor force -- is held by two or more organizations which joined forces on the market and an example is offered by the American automobile industry. Here however, other forces include the disequilibrium, such as more and more popular outsourcing operations or the search for hi-tech technicians. The annexed table reveals the market equilibrium for the auto industry in various contexts.

Finally, in a monopolistic competition, the equilibrium is more easily achieved as both parties are presented with bargaining powers and alternatives.