Wage Elasticity of Labor Supply Measure
A Wage Elasticity of Labor Supply Measure is a price elasticity of supply measure that applies to labor supply changes with respect to labor wage changes.
- AKA: Labor Supply Elasticity.
- Context:
- output: a Price Elasticity of Labor Supply Score (which can typically be positive but can be negative).
- It can be represented by a Price Elasticity of Labor Supply Curve.
- …
- Counter-Example(s):
- See: Labor Supply Size, Labor Wage Change.
References
2014
- https://lumen.instructure.com/courses/196787/pages/Section8-18?module_item_id=4541557
- QUOTE: The concept of price elasticity of supply can be applied to labor to show how the quantity of labor supplied responds to changes in wages or salaries. What makes this case interesting is that it has sometimes been found that the measured elasticity is negative, that is, that an increase in the wage rate is associated with a reduction in the quantity of labor supplied.
In most cases, labor supply curves have their normal upward slope: higher wages induce people to work more. For them, having the additional income from working more is preferable to having more leisure time. However, wage increases may lead some people in very highly paid jobs to cut back on the number of hours they work because their incomes are already high and they would rather have more time for leisure activities. In this case, the labor supply curve would have a negative slope. The reasons for this phenomenon are explained more fully in a later chapter. The Case in Point in this section gives another example where an increase in the wage may reduce the number of hours of work.
Key Takeaways
- … When applied to labor supply, the price elasticity of supply is usually positive but can be negative. If higher wages induce people to work more, the labor supply curve is upward sloping and the price elasticity of supply is positive. In some very high-paying professions or other unusual circumstances, the labor supply curve may have a negative slope, which leads to a negative price elasticity of supply.
- QUOTE: The concept of price elasticity of supply can be applied to labor to show how the quantity of labor supplied responds to changes in wages or salaries. What makes this case interesting is that it has sometimes been found that the measured elasticity is negative, that is, that an increase in the wage rate is associated with a reduction in the quantity of labor supplied.
2012
- http://www.enotes.com/homework-help/what-labor-supply-elasticity-explain-problems-with-320424
- QUOTE: The supply of labor is generally said to be more elastic in lower-skilled jobs that require less training. For more skilled jobs, the supply of labor cannot change very quickly. For example, if the wages of doctors went up, there would be no great change in the number of doctors working because it takes a long time to get the training needed to be a doctor.
2007
- Sonia Bhalotra, “Is Child Work Necessary?” Oxford Bulletin of Economics and Statistics 69:1 (2007): 29–55.