rate, under the ceteris paribusassumption. A change in the wage or salary will result in a change in the

quantity demanded of labor. If the wage rate increases, employers will want to hire fewer employees. The
quantity of labor demanded will decrease, and there will be a movement upward along the demand curve. If

the wages and salaries decrease, employers are more likely to hire a greater number of workers. The quantity

of labor demanded will increase, resulting in a downward movement along the demand curve.

Shifts in the demand curve for labor occur for many reasons. One key reason is that the demand for labor is

based on the demand for the good or service that is produced. For example, the more new automobiles

consumers demand, the greater the number of workers automakers will need to hire. Therefore the demand

for labor is called a “derived demand.” Here are some examples of derived demand for labor:

• The demand for chefs is dependent on the demand for restaurant meals.
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