Answering 8 Questions - Research Paper Example

By the time, I learnt this course in this semester I gained elucidated concepts regarding this topic. To my understanding, Labor market is a platform where the demand and supply of labor takes place. Supply consists of workers who are willing to get employed and demand refers to the employer side, who decide what type of labor is required at what price. The way labor market and product market interact with each other is very interesting. There is a dual role of both Labor market and Organizations.

Labors are simultaneously suppliers of labors as well as they create demand for the products that organizations produce. They income that is earned from the labor markets by workers is used in consuming goods and services offered by the organizations. On the other hand, organizations create employment opportunities for labors and they also create products to meet the demand of consumers/labors. In this way, the cycle continues. Unemployment leads to less spending which eventually contracts the demand in the product market.

Labor market is not like spot market, where there are large numbers of buyers and sellers exist. And sellers switch to other similar goods for a minute saving in cost. In contrast to that, in labor market, both employees and employers pursue for long term relationships. Normally, when price of hiring labor is high, organizations do not employ more labor. On the other hand, in order to attract more labors organizations increase the price to bring in more labor. In reality, the situation is not as simple as it is simply indicated in demand and supply of labor.

Employers are reluctant to increase the wage rate for labor as it increase the overall cost of production. Internal labor market refers to that labor market in which a firm hires and places candidates on a certain vacancy from utilizing the internal sources of the organization. The advantage of this type of labor market is that it doesn’t incur