The demand for a resource such as labor is often said to be a derived demand....

The demand for a resource such as labor is often said to be a derived demand. What factors would influence the demand for labor? How does this impact the distribution of income?

Expert Solution

Demand for labour is derived demand. Because it occurs due to demand for the commodities or services that are produced by labour.

Following are the factors would influence the demand for labour:

→Demand of goods produced by labour. If demand for labour intensive goods rises,then demand for labour also increases.if demand for labour intensive goods declines,then demand for labour also decreases.

→Avilability of skilled(qualified) labour. Availability of required labour influence demand for labour.

→Substitutes to produce. If there are substitutes to produce,their availability and cost also influence demand for labour.

→Changes in the usage of other factors of production can also influence demand for labour.

If the demand for other factors which should be used with labour changed,also there will be a change in demand for labour too.

→Change in technology. Change in technology influence demand for labour. Because it means producing in a scientific and new method. It will change the demand for labour.

Above mentioned are the factors influence the demand for labour.

=>Change in demand impact on the distribution of income can be explained as below:

Increase in demand for labour will decrease inequalities by distributing income to many. And decrease in demand for labour may increase inequalities by creating unemployment.

Rahul Sunny answered 8 months ago

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