Final answer:
A larger supply of workers usually leads to a decrease in real wages, due to increased competition among workers and reduced incentive for employers to offer higher wages. Skills, productivity, and external factors like trade barriers also impact wage levels in the economy.
Step-by-step explanation:
Other things being equal, a larger supply of workers tends to decrease real wages. When the labor market is saturated with a large number of available workers, employers have a greater selection of potential employees to choose from, which gives them less incentive to offer higher wages. Workers who can produce more will be more desirable to employers, which will shift the demand for their labor to the right, and potentially increase wages in the labor market.
By contrast, barriers to trade and other such factors tend to reduce the average level of wages in an economy by limiting opportunities and thus decreasing demand for labor. Additionally, the individual's choice between supplying labor into the market or using time for leisure activities also plays a role in the labor supply. At every given price level, the higher the wage, the more labor is willing to work and forgo leisure activities. If a large share of workers have relatively low skills, then a smaller supply of such workers due to factors such as reduced immigration would tend to shift the supply curve to the left, raising the equilibrium wage for low-skill labor.