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Humans require marketplaces to purchase both essential and non-essential products such as food, clothing, cosmetics, and so on. A market is described as a place where interested buyers and sellers get together for the sole goal of trading privately, either using currency or through batter trade. Markets include open-air markets, shopping malls, cattle markets, and second-hand products marketplaces, among others. In general, we consider a market to be a location where people trade and acquire real things. The labor market, on the other hand, is a different form of market structure that allows buyers and sellers to exchange any products and services. The term "labor market" sounds unfamiliar in the context of a marketplace. Thus, this paper will explain the concept of labor markets in simple and clear terminology and distinguish it from the traditional market terminology.
One of the most common types of markets is a goods market. This is a common place for customers to purchase mostly tangible or physical items. Goods markets are characterized by buyers and sellers interacting and bargaining over prices with the aim of buying or selling goods respectively. Goods markets are important as they bring producers and consumers together. The interaction between producers and consumers determines how much goods are produced, how much of it is consumed, and the exchange rates. Under ideal conditions, the number of goods produced and that demanded by consumers balance out, leading to market stability regarding exchange rates. However, in the case of a surplus or deficit of goods produced or availed for sale, prices are unstable only stabilize after a long run. Goods markets are sometimes known as real markets as they deal with tangible goods.
Labor markets are different from goods markets in the nature of items availed for exchange. Under this type of market, persons with specialized skills, also known as employees, provide intangible goods, known as services, to employers. In a labor market, employees and employers exchange information about the recruitment process, availability of jobs in the market, increasing or reducing their wages, competition levels, and adjusting their work hours. The Stop and Shop market is an example of a labor market. Here various employers hire workers to sell their products at different wage rates as long as their performance rates are high. The more the workers, the higher the productivity because there will be a division of labor and more sales in the labor market setting.
Labor markets can be termed as strong or weak depending on the availability of workers to perform specific roles. In a strong labor market, employers will try to raise the wages and compensation to attract workers to their firms. With more qualified workers and good compensation rates, there will be an increase in productivity. Therefore, in a strong market employers negotiate for better terms as opposed to a weak market.
In addition, in a strong labor market, factors such as wages, health insurance covers, flexible work schedules, and pension benefits become critical towards landing the most experienced workforce. For instance, in a strong labor market, suppose two companies wish to attract an employee with a unique set of skills to their firm, each will offer a competitive compensation accompanied by extra benefits. Conversely, in a weak labor market (characterized by high unemployment rates and few jobs available), reduction of wages and salaries, and dismissal are a common occurrence. Overall, wages are determined by the number of employees and jobs in the labor market, which is demand and supply. When the number of skilled personnel is high and given jobs are few, we can say the labor market is strong as available job positions are all taken up.
There are two types of markets we have compared in this paper. One is the goods markets that consist of goods that are seen and are tangible. The term "goods markets" also looks and sounds familiar to everyone. The prices of goods are determined by the supply of sellers and the demand of the buyers. Secondly, is the labor market, which is an information market that for both employers and employees and it focuses on human resource and is intangible. Economic crossroads such as the Great Depression and the financial crisis of 2008 have resulted in labor markets coming under increasingly strict regulations resulting in strong markets, and this make the economy better.
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