The Overall Demand for Labor, Essay Example

Calculate the percentage increases in civilian employment for the United States, Japan, Germany, France, Great Britain, Italy, and Canada for the most recent 10-year period. Use a table to present your data.

Source: (Bureau of Labor Statistics)

The three countries with the greatest growth of labor demand were Canada, Italy, and Germany where as those with the smallest growth of labor demand were Japan, U.S., and France. The demand of labor grew by a total of 14.19%, 5.91%, and 5.11 % in Canada, Italy, and Germany respectively over the period 2001-2010. The labor demand grew by only 1.56% in the U.S. and 4.78% in France while it decreased by 2.30% in Japan during the same period.

Explain the factors that will, all other things being equal, influence the increase in labor demand

The factors that influence the increase in labor demand are an increase in demand of a particular product or service, a decrease in wage rate, an increase in the price of a product or service, cost of substitution, and a more productive labor force.

When the demand for a product or service increases, employers need greater number of workers to meet the demand. As a result, they also increase their demand for labor. Similarly, a decrease in wage rate means the employers can hire workers for lower costs. Thus, a cheaper labor results in higher demand by the employers. An increase in the price of an underlying product or service also increases the demand for labor by the employers due to higher sales and profit potential. It may also happen that labor intensive production methods are more cost effective than capital intensive production methods. In such a scenario, demand for labor will increase at the expense of the technology. A more productive labor force with increasing marginal productivity will also face higher demand by the employers. This is because increasing marginal productivity of labor results in higher production efficiency and lower average production costs.

Why should these countries care about immigration when discussing the labor market? How does immigration affect jobs and wages of native-born population in the labor force? (You may want to consult other sources to find additional information that relate to this question)

These countries should care about immigration when discussing the labor market. This is because immigration has both economic and social impacts on a country. Immigration is beneficial when there is a shortage of desirable skills such as in healthcare. Developed countries have lower birth rates and people are living longer which means demand for certain products and services have increased at a higher rate than the country’s capacity to produce workers to meet those demands. Immigration also contributes towards economic growth as well as revenues for the government. In addition, immigrants also help the businesses keep production costs lower and increase their profitability. immigrants also help create new jobs through entrepreneurships. They also indirectly help the economy grow through greater demand for goods and services.

But immigration results in greater supply of labor which may contribute towards lower wages and salaries for native-born residents. Immigration may also decrease employment opportunities for natives because they increase the competition for jobs. Some goods and services may become more expensive such as housing if they are in limited supply, thus, immigration may result in lower purchasing power for some of the native residents.

Reference

Bureau of Labor Statistics. (n.d.). International Labor Comparisons. Retrieved April 4, 2012, from http://www.bls.gov/ilc/flscomparelf.htm