Demand for labor

Definition

The demand for labor refers to the quantity of workers that employers are willing and able to hire at different wage rates in a specific period.

Related terms

Marginal Revenue Product (MRP): The additional revenue generated by each additional unit of labor hired.

Substitution Effect: When firms switch from one factor of production (such as capital) to another (like labor) due to changes in relative prices.

Complementary Factors: Resources or inputs that are used together in production, such as labor and capital.