What is the elasticity of labor supply? Discuss why economists disagree about the magnitude of the elasticity of labor supply.
What is the elasticity of labor supply?
Elasticity of labor supply refers to the degree to which the quantity supplied of labor will go up or down as wages increase or decrease. If there is a high degree of elasticity, the quantity supplied of labor will change a great deal as wages change. If the supply is inelastic, the quantity supplied will not change much as wages change. 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. The economists disagree about the magnitude of the elasticity of labor supply, as they holds a different views about that. As the economists has disagreement with the key factors affecting the labor supply, i.e the real wage rate on offer in the industry itself, overtime, substitute occupations, barriers to entry, improvement in the occupational mobility of labor, non monetary characteristics of specific job, job migration etc. So having their different views regarding factors affecting elasticity of labor supply they disagree to the point.