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Supply of Labour (Supply elastic.. (if geographically mobile, if…
Supply of Labour
Supply elastic..
if geographically mobile
if occupationally mobile
if a short training period
in the LR
if few qualifications and skills required
Supply inelastic
if geographically immobile
if occupationally immobile
if a long training period
if in the SR
if many/significant qualifications and skills required
Determinants
SR
Backward bending supply curve
Income effect dominates at higher wages
Increased wages encourage workers to increase the number of hours worked. However, once a target income is met workers place a greater value on leisure time and work fewer hours.
Substitution effect dominates at lower wages
As wages increase leisure becomes more expensive in terms of opportunity cost
LR
promotion chances
flexibility of location
status
qualifications and skills.
the convenience and flexibility of hours
job security
pleasantness of the job
perks and fringe benefits
quality and quantity of training on offer
location
Wage elasticity of supply = % change in quantity of labour supplied / % change in wages