Determination of Wage Rate in a Competitive Labour Market
A competitive labour market is one where there are so many employers and unorganized employees to the extent that a single employer of employee cannot influence the wage rate either by refusing to employ or by refusing to be employed.
In a competitive labour market, the wage rate is usually determined through the forces or interplay of demand and supply.
Therefore a firm in a competitive labour market is a Wage Taker.
In a perfect or competitive labour market, wage rate is usually determined as follows:
(i) If demand for labour exceeds the supply wage rate will rise.
(ii) If supply of labour exceeds the demand, wage rate will fall.
(iii) If demand for labour equals the supply, wage rate will be favourable to both the employer and the employee.
Click here to download “Determination of Wage Rate in a Competitive Labour Market” as PDF.
Click here to save this Post as PDF
