Labor Market Theory examines how labor supply and demand interact to determine wages and employment levels. It suggests that workers offer their skills and time in exchange for compensation, while employers seek to hire the best talent at the lowest cost. Factors such as education, experience, and economic conditions influence both the supply of labor and the demand for workers. The theory also considers the role of minimum wage laws, unions, and government policies in shaping labor markets. These elements can affect the balance between employers and employees, impacting job availability and wage rates. Understanding these dynamics helps explain variations in employment across different sectors and regions.