please explain demand side factors/ supply side factors that affect wage disparity

Expert Solution

The law of demand applies in labor markets and states that a higher wage, a higher price in the labor market leads to a decrease in the quantity of labor demanded by firm and there will be a movement upward along the demand curve. While a lower salary or wage leads to an increase in the quantity of labor demanded resulting in a downward movement along the demand curve.

Other factors :

Demand for Output : When the demand for the good produced increases, both the output price and profitability increase.

Technology : An increase in the availability of certain technologies may increase the demand for labor Those workers who do not adapt to changes in technology will experience a decrease in demand.

Number of Companies : An increase in the number of companies producing a given product will increase the demand for labor resulting in a shift to the right

Education : A well-trained and educated workforce causes an increase in the demand for that labor by employers.

Government Regulations:government regulations can increase or decrease the demand for labor at any given wage

Price and Availability of Other Inputs : if prices of other inputs fall, production will become more profitable and suppliers will demand more labor to increase production.

The law of supply functions in labor markets and states that a higher price for labor leads to a higher quantity of labor supplied whereas a lower price leads to a lower quantity supplied.

Other factors

Number of Workers: An increased number of workers will cause the supply curve to shift to the right. An increased number of workers can be due to several factors, such as immigration etc

Required Education: The more required education, the lower the supply

Government Policies : Government policies can also affect the supply of labor for jobs. The government may support rules that set high qualifications for certain jobs: academic training, certificates or licenses, or experience

Rahul Sunny answered 1 year ago

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