A shift in the market demand for labor occurs when the total number of workers employers wish to hire changes at every wage level, due to factors other than the wage rate. These changes are driven by factors other than the wage itself, such as changes in the price of the firm's output and technological advancements in production. When the labor demand shifts, the entire demand curve moves either to the right or to the left. A rightward shift signifies that employers are willing to hire more workers at each wage level. Conversely, a leftward shift indicates employers desire fewer workers at each wage level.

One key factor influencing labor demand shifts is the price of the product produced by labor. In a competitive market where firms sell identical products at a uniform price, the value of the marginal product of labor (VMP_L) is calculated by multiplying the marginal product of labor by the product's market price. An increase in the product price directly raises the VMPL.

Each firm's demand for labor reflects the value of the marginal product of labor at different quantities of labor hired. So, a higher VMP_L leads to the firm willing to hire additional workers at any wage rate. It follows that the demand for labor by all firms in this market increases, shifting the demand curve for labor to the right.

Conversely, if the product's price decreases due to consumers' changing tastes and preferences, then the VMP_L will also be reduced. So firms will then reduce the number of workers employed at any wage rate. This reduction in the number of workers leads all firms to decrease their labor demand, shifting the market demand curve for labor to the left.