Introduction
The labor market is constantly moving. As in every other market, the constant interaction of demand and supply influences the determining of various factors like the employment rate, the minimum wage, the wages according to categories, etc.
Modern economy
In the modern type economy there exist certain pillars on market interaction between the market players. Interdependence and the gains from trading with each other are two major pillars. Since the times of Adam, Smith trade has been seen as a tool that benefits both parties taking place. In the terms of a labor market, the trade would be between the persons seeking work and thus offering their services and those who are in search of a labor force for their factories or businesses. This is expressed beautifully in the concept of comparative advantage. With this concept, Smith wanted to show that to maximize your gains from trade you have to specialize in the production, offering, of something (Mankiw, 2000, p. 51). Thus, for Smith, nations have to specialize in the production of certain goods they can offer with high quality and with reasonable costs and offer these products to the market to gain a comfortable market share. Speaking in terms of the labor market, Smith is proposing the work seeking to specialize in a certain area so that when to offer his/her services to the market.
Characteristics of the market equilibrium
Another important concept that Mankiw speaks about market equilibrium is that of demand and supply elasticity. The elasticity of demand is the change of the demands for jobs by people by the changes in wages and benefits offered for these jobs. Supply elasticity is when you change the offer for wages and benefits and see the response from those who seek work (the demand) (Mankiw, 2000, p. 93).
Conclusion
Full labor market equilibrium is when the demand for jobs equals the offer for jobs. This means that all people who seek work can find jobs and all companies who seek labor force, find it. This is something economists consider almost impossible to be realized because several factors are influencing the market in different periods but when the demand and supply tend to go toward that point of full employment, which means that we are moving toward market equilibrium.
References
Mankiw, N. G. (2000). Principals of Economics. 4th Edition. McGraw-Hill: New York.