Labor Market Overview (Part 2). The Labor Market. Labor markets determine Terms of employment Earnings versus total compensation Working conditions Levels of employment These are determined by the interaction of demand and supply. Demand for Labor. Derived demand
→ W/C↓ → subst. Effect →DL↑
→ W/C↑ → subst. Effect →DL↓
Therefore, the total effect of changes in C is ambiguous.