Definition
- 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.
- Not to be confused with: 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.
Test yourself
What is the difference between excess supply of labour and equilibrium wage?
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.