Summary
The supply of labor refers to the number of workers willing and able to work in a specific job or occupation at a given wage. Factors such as population size, net migration, income tax rates, and trade unions influence labor supply. The elasticity of labor supply measures how responsive the quantity of labor supplied is to changes in the wage rate.
- Labor Supply — the number of workers willing and able to work in a specific job at a given wage. Example: More workers may enter an occupation if the wage rate increases.
- Elasticity of Labor Supply — measures the responsiveness of labor supply to changes in wage rate. Example: If the elasticity is 2, a 10% wage increase leads to a 20% increase in labor supply.
- Net Migration — the difference between the number of people entering and leaving a country. Example: Positive net migration increases the labor supply.
- Trade Unions — organizations that influence wage levels and working conditions. Example: Trade unions can make an occupation more attractive by negotiating higher wages.
Exam Tips
Key Definitions to Remember
- Labor Supply
- Elasticity of Labor Supply
- Net Migration
- Trade Unions
Common Confusions
- Confusing labor supply with labor demand
- Misunderstanding the impact of non-monetary factors on labor supply
Typical Exam Questions
- How might trade unions affect the supply of labour to an occupation? Trade unions can increase wages, making the occupation more attractive.
- Why is the supply of labour to a particular occupation upward sloping? Higher wages attract more workers, increasing labor supply.
What Examiners Usually Test
- Understanding of factors influencing labor supply
- Ability to explain the concept of elasticity of labor supply
- Impact of wage changes on labor supply