Wage Elastic Labor Demand

A Wage Elastic Labor Demand is a negative wage elasticity of labor demand that is a price elastic demand ([math]\displaystyle{ \lt -1 }[/math]) (for labor demand change and labor wage change).

• Context:
  • It can (typically) indicate that:
    • Labor Demand increases quickly relative to a Wage Decrease.
    • Labor Demand decreases quickly relative to a Wage Increase.
• Example(s):
  • an Elastic Cashier Demand of [math]\displaystyle{ -4.2 }[/math] (if cashier wages increases 9% but cashier demand falls by 41%.
  • …
• Counter-Example(s):
  • Inelastic Labor Demand.
  • Elastic Product Demand.
  • a Positive Price Elasticity.
• See: Cross-Wage Elasticity, Wage Elasticity Curve, Substitutable Jobs, Complementarity Jobs.

---

---

References

2013

• (Smith, 2013) ⇒ Clair Smith. (2013). “The Elasticity of Labor Demand." Economics 315: Labor Economics Course, Penn State
  • QUOTE: ... The terms elastic and inelastic, as used above, have both technical and relative uses. The technical use depends on the absolute value of the elasticity calculation above. ...

    ... If the absolute value of the elasticity of labor demand is > 1, that portion of demand curve is considered ELASTIC.

---