Labor Market

Labor Market Scenario

What is the Area of Employment: Technology, Cell Phone Makers

The development of the smart phone caused a shift of supply and demand in the labor market for this industry. Cell phone makers of all of the major phone providers had to develop a comparable phone that could compete with the first smart phone. More people were needed for research and development which increased the demand for labor in that market. While this was happening the demand for flip phones decreased so in turn the demand for the labor to make those phones also decreased.

Why has the Shift Occurred: Changes in Technology

A change in technology changes the demand for a product, when the demand for a product changes so does the demand for labor in that market. In this case new technological developments brought about the smart phone, a touch screen phone with internet access and apps that allow the user to do much more than was ever possible to do with a mobile phone before.   This technological change increased the demand for labor to develop, produce and update the smart phones.

In What Direction Would the Shift in labor Supply and Demand Go?

The increase in labor demand would cause the demand curve to shift to the right.

What would be the Effect on the Equilibrium of the Labor Market?

Because of the increased demand for labor the market must adjust so that the supply will meet demand, otherwise a shortage of labor will develop. In order for the adjustment to be made the equilibrium wage must increase to make the market more desirable for potential workers. Current workers should also be encouraged to work more hours by offering overtime or other incentives.

The breakdown of this scenario shows how changes in technology effect not only the demand for products but the demand for labor as well.