Perfectly competitive labor model
Several models can be used to explain supply and demand of labor in an economy. These models generally relate the supply and demand of labor in terms of employment and wages that an employer would like to pay for a certain employment. The most common models are based on wage level, employment levels and rates, unemployment and wage dispersion. One of these models based on wage level is the perfectly competitive labor market where free forces of the market decide on employment levels. This is best explained in perfectly competitive labor model in Wallisian labor market (Alicante, 2010).
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