A shift in the labour demand curve happens when the amount of labour businesses want to hire changes at every wage level. This shift is caused by factors other than a change in the wage rate itself. This is different from a movement along the curve, which only happens when wages change.

Because the Marginal Revenue Product (MRP) curve represents the demand for labour, any factor that changes the MRP will result in a shift of the labour demand curve.

Factors that shift demand to the RIGHT (increase):

• Higher consumer demand for the final product.
• Increased labour productivity.
• Higher prices for the goods or services produced.
• Technological changes that make workers more efficient.

Factors that shift demand to the LEFT (decrease):

• Lower consumer demand for the product.
• Decreased labour productivity.
• Lower prices for the goods or services produced.
• Automation or replacing human labour with machines.