Changes in the Price of and Demand for Output
When demand for a firm's output rises, the firm can increase revenue by producing more output. This eliminates a shortage caused by demand exceeding supply. To produce more units of output, the firm will hire more workers. For example, if a clothing manufacturer gets a prominent celebrity to endorse their goods, demand for their clothing may increase. In order to keep up with this demand, they will hire new workers to produce even more clothing. This will increase their overall revenue.
Changes in Technology
In general, economists refer to factors that change workers' marginal product of labor as changes in technology, and technology, such as the use of computers in offices, can either make workers more productive (and thus increase their marginal product of labor) or replace them (thus lowering their marginal product of labor). The improvements in computer processing power have made workers who use computers much more productive, which increases their productivity. At the same time, improvements in cell phones and social media have lowered workers’ productivity at the workplace. As a result, changes in technology can result in shifts in labor demand in either direction.
Changes in the Supply of Other Resources
When the supply of a complement to labor increases, the price of that resource still decreases, but because labor is used together with its complements in the production process, the price decrease makes both labor and its complement more attractive resources. Therefore, demand for labor increases when the supply of a complement to labor increases, and demand for labor decreases when the supply of a complement to labor decreases. For example, technology can also at times be a complement. Technology to store and transport avocados makes them more profitable, increasing the demand for labor.
Changes in Tastes for Leisure
Changes in Alternative Labor Opportunities
When the alternative opportunities for a worker increase, labor supply in the market under consideration decreases because the worker is switching some of their labor supply to other markets. Conversely, when the alternative opportunities for a worker decrease, labor supply in the market under consideration increases, since the individual no longer has as many places to potentially provide their services. If an individual is trained as a teacher and a plumber, they may get a teaching job and spend less time plumbing, taking away supply from the plumbing labor market. But if the local college where the person was teaching closes, they would likely spend more time plumbing because their teaching services were no longer needed, thus adding to the plumbing labor market.
Changes in Population
Just as the number of sellers is a supply shifter in goods markets, it is also the case that the number of sellers is a supply shifter in labor markets. In labor markets, however, the sellers of labor are people looking to work, so the movement of people around the world causes labor supply curves to shift. Specifically, immigration (increases in the number of people) shifts the labor supply curve to the right, and emigration (decreases in the number of people) shifts it to the left.