In labor markets, how does an increase in labor demand typically affect wages and employment levels?

When labor demand increases, businesses need more workers to produce goods or services, which usually leads to higher wages. This happens because companies compete to attract the best employees, offering better pay to fill the available jobs. For example, if a new factory opens in a town, it will need many workers, so it might raise wages to attract people from other jobs. As wages go up, more people may want to work there, leading to increased employment levels. Overall, higher labor demand creates a cycle where both wages and job opportunities tend to rise.