Definition
- Equilibrium wage
- The equilibrium wage is the wage at which the quantity of labour supplied equals the quantity demanded, so every willing worker can find a job.
- Not to be confused with: Excess supply of labour
- An excess supply of labour arises when the wage sits above equilibrium, so more people want jobs than employers wish to fill.
Test yourself
What is the difference between equilibrium wage and excess supply of labour?
Excess supply of labour: An excess supply of labour arises when the wage sits above equilibrium, so more people want jobs than employers wish to fill.