How to wage rate is determined?

The wage rate in a particular industry is determined by the market forces i.e. demand and supply.

The point at which the demand and supply of labour will intersect will determine the wage rate for that particular industry.

A rise in the demand for labour will lead to a rise in the equilibrium wage rate.

A fall in the supply of labour will result in a rise in the equilibrium wage rate.

Download handout 'labour market graphs'