Job offer

economic-dictionary

The job offer represents the number of people who offer their labor services in the labor market.

In relation to the labor or labor market, it is the market where the factor of production of labor is bought and sold.

On the one hand, the job offer is made up of all the workers who sell their labor effort in the labor market.

Likewise, the demand is all companies that require workers to develop their production process.

On the other hand, the price or remuneration in the labor market is called salary and represents the amount of money that the employee receives for working within a company.

How the quantity of labor supplied behaves

Of course, when analyzing how the quantity of supply behaves in the labor market, we realize that it behaves like in any other market.

To understand it better, let's look at the following graph that represents the job market for systems engineers.

Where

  • D is the number of companies that want to hire systems engineers.
  • S is the number of systems engineers offering their labor services in the market.
  • W is the work compensation or salary paid by companies and received by systems engineers.
  • L is the amount of the labor factor that is available for purchase and sale.

Indeed, the graph tells us that under market conditions the equilibrium salary is $ 30, if the payment will be made in dollars and the equilibrium quantity would be 300 engineers hired in the market.

1. Faced with a salary increase

Either way, the quantity of labor supplied is a function of price. That is, if the salary increases to $ 40, the quantity offered or the number of engineers who intend to work will increase to 400 engineers who intend to be employed.

This case is observed in the graph below, where we observe a new point of intersection in the supply curve, at the price of 40 there is a supply of 400 engineers.

2. Faced with a drop in salary

Whereas if the salary drops to $ 20, fewer engineers want to be hired at that price, so only 200 systems engineers would intend to work.

That is why the following graph shows us on the supply curve a new point of relation to the price of 20 there is a quantity supplied of 200 engineers.

Consequently, we can understand that the price and the quantity supplied have a directly proportional relationship, if the wage increases the quantity supplied also increases.

In the same way, if the price of wages decreases, the quantity supplied in the labor market also decreases.

How the job offer shifts

Furthermore, the labor market could also be affected by complete movements in the labor supply, and both the increase and decrease in the labor supply will have an impact on the price of the factor of production.

1. Movement of supply to the right

Of course, if we continue to analyze the previous market, of systems engineers and consider that this year one hundred systems engineers graduate from different universities in the country and they begin to send their resumes because they want to join the job market.

Therefore, this would cause the price of wages to decrease, because the factor of production becomes relatively more abundant.

Given that this situation is illustrated in the following graph, when the shift from S to S1 occurs, what causes the increase in supply to produce a decrease in wages.

2. Movement of supply to the left

Now, if what happened were that 50 systems engineers migrate to other countries because they have been hired by international companies.

So, this would cause the salary to increase, because systems engineers would be relatively scarcer in the country and the companies that want to hire them will have to pay higher salaries.

Since, we can see this in the graph below where S, moves to the left, the line represented by S1 and this causes the wage to increase at the new equilibrium point.

Consequently, if the supply of labor increases, the equilibrium wage decreases. But if the supply of labor decreases, the price of wages increases.

In other words, supply and price move inversely, more supply implies lower salary and less supply corresponds to a higher salary.

Why is there such a difference in wages?

It turns out that in all countries there are gaps between wages, there are workers who have very high wages and other very low wages.

In reality, these differences occur because if we realize there is a greater supply of unskilled workers, for that reason, as we could see in the graph, it makes wages lower, because workers are relatively more abundant.

On the contrary, skilled workers are scarcer in any market, so, being relatively scarcer, their remuneration will be higher.

For example, if we see it in the medical field, a general practitioner earns less than a neurologist. Because there are more general practitioners, in relation to neurologists who are more specialized and therefore are scarcer; which makes your salary higher.

Finally, we understand that the labor market behaves like any other market, so the quantity supplied and the demand also depend on the price. Even so, there are exceptional cases that could modify wages without necessarily having a movement on the part of demanders and suppliers. For example, government intervention. Then that could have effects on supply and demand.

The quantity demanded moves inversely and the quantity supplied moves directly proportionally.

We can also notice that the salary changes when the supply increases or decreases; as well as the demand for labor, changing the equilibrium price. Lower demand and higher supply cause wages to fall; while more demand and less supply cause salary to increase.

Offer function

Tags:  Spain banking banks 

Interesting Articles

add