• Identify the factors that influence the supply and the demand for labour
  • Distinguish between the factors that shift the supply and demand curves for labour and those that affect their slopes.

  •  Demonstrate the process of market determination of the equilibrium wage rate using supply and demand curves of labour.

  •  Explain the role of the institutions like labour unions in a dual wage determination.
  • Explain the concept of the unemployment and identify its various forms, causes and solutions.


 Demand for labour may be defined as the total number of workers employers are willing and ready to employ or hire at a particular time and at a given wage rate.

The demand for labour is a derived demand, because labour is not required for its own sake but for what it can help to produce.

Factors Affecting the Demand for Labour

  •  The size of market: The size of the market for goods and services produced determines the demand for labour.

  • The larger the market, i.e. the greater the production of goods and services, the higher the demand for labour to produce the required goods and services.
  •  Number of industries: The higher the numbers of industries that produce the needed goods and services, the higher demand for labour.

  • Wage rate or price of labour: demand for labour by employers de on the price at which labour is of offered for sale (by workers). If labour is willing to take a low wage rate, the demand labour will be high.

  • Availability of other factors production: If other factors production such as land and capital available in large quantity to produce required goods and services, there be a corresponding high demand labour

  • Efficiency of labour: If the efficiency labour is high, there would be propensity for employers to engage labour and vice versa.
  • Demand for goods and services: demand for goods and services in a country can stimulate an increase in demand for labour.
  • Nature of industries: The nature industries – whether it is capital-intensive or labour-intensive will determine  the demand for labour. The labour-intensive industries will lead to high demand for labour.

  • State of employment: The state of employment determines the demand labour. If the economy
    • has reached full employment, there will be little or no demand for labour but if it is employment,
    • there will be need demand for more labour.


Definition: Supply of labour may be defined as the number of people of working age employment at a particular time and wage rate. In other words, supply of labour can be referred to as the services of available in the labour market.

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