Alright. So now let's consider some of the factors that could shift the supply of labor. Alright. We saw shifts in the demand, now let's see shifts in the supply. So the first one that can shift supply is the size of the population, okay? So you can imagine if there's more people in the population, there's going to be more supply of labor, right? It's going to have a direct effect there. If the population increases, labor supply shifts to the right. In red. Labor supply shifts to the right and this can be from a few different places, right, immigration into your country, more people in the country or if the births exceed the deaths, right, that's usually the case where we see there's more people being born than dying so there's generally an increase in that labor over time. Okay. And obviously the opposite, if the population decreases, well, we're going to have a shift to the left. There's just fewer people working. Okay. Let's go on to this one here, demographics. So the demographics of the labor force also affect the labor supply. So the more people that are what we call a working age which is usually you know between let's say 18 and 65 here in the US, the greater the supply of labor, right? The more people that are in that age range, then there's going to be more people working. So this happened a great example was in the 1970s and 1980s, that's when the baby boomers, that generation finally hit the working age and we saw a huge increase in the supply of labor. Another example here, which doesn't really have to do with the working age, but it has to do with demographics of the workforce is women in the workforce. When you think of back at the turn of the 20th century, the early 1900s, most women were homemakers, there were big families, so they usually needed the wife to stay home, take care of the kids, take care of the house and there was usually enough money being made by just the husband, just the male going to work and being able to provide for the family. As we see over time, right, we're seeing more and more women in the workforce, we're seeing that every day it's increasing, and that's been happening since about the sixties and seventies. We've been seeing more and more women in the workforce. So the demographics, that's also going to affect the supply of labor. And the last one here, the availability of alternative opportunities. So let's think about that. This is opportunities in other labor markets, alright? So now let's think about a specific labor market. Let's say you are a pizza chef, right? You could also take your skills to go become a pastry chef or something. I know that pastry chefs, it's a little more delicate, but let's just say they're substitutes, right? You could work make pizzas, or you can go bake pastries. So you can imagine if the wage increases in a similar market, so you're over there making pizzas and now you hear that the wage for pastry chefs has gone way up, well the supply of labor in the first market is going to decrease, right? So the supply of labor in the pizza market is going to decrease when the wage goes up in the pastry market, right? Does that make sense? That's because people are going to leave the pizza market to go work as pastry chefs instead to make more money. And the opposite if the wage decreases so if now they're paying less for pastry chefs, those pastry chefs are going to come over to the pizza industry and start making pizzas. So we'll see an increase in the first market, right? So you got to think about the other market, what's happening there and how that affects our market. Okay? So I got an example there. Well, I like my example now better maybe the pizza and the pastry chefs, but apple pickers and orange pickers, right? That's a good example. If the price of the wage paid to apple pickers goes way up, you can imagine that orange pickers probably have a lot of the same skill set needed to pick apples. Well, they're going to stop picking oranges and go take the higher wage picking apples. Alright, so let's go ahead and do some practice problems related to this and then we'll move on to the next topic.
Shifts in Labor Supply: Study with Video Lessons, Practice Problems & Examples
Created using AIFactors influencing labor supply include population size, demographics, and alternative opportunities. An increase in population or a higher proportion of working-age individuals boosts labor supply, shifting it to the right. Historical trends show more women entering the workforce since the 1960s. Additionally, if wages rise in one labor market, workers may shift from another, decreasing supply in the original market. Understanding these dynamics is crucial for analyzing market equilibrium and labor economics.
Shifts in Labor Supply
Video transcript
A low birthrate in Japan led to a general increase in the age of the population in the country. During the 1990s, this led to a decrease in the number of working age people in Japan. What would we expect to occur in the labor market?
The wages paid to pastry and sous chefs are $15 and $25, respectively. If pastry and sous chefs are alternative opportunities and the sous chef wage increased to $30, what would occur in the labor market for pastry chefs?
Here’s what students ask on this topic:
What factors can cause a shift in the labor supply curve?
Several factors can cause a shift in the labor supply curve. Firstly, changes in population size can directly affect labor supply; an increase in population shifts the labor supply curve to the right, while a decrease shifts it to the left. Secondly, demographics play a crucial role; a higher proportion of working-age individuals (typically 18-65 years) increases labor supply. Historical trends, such as more women entering the workforce since the 1960s, also impact labor supply. Lastly, the availability of alternative opportunities in other labor markets can cause shifts. For example, if wages rise in a similar market, workers may leave their current jobs to pursue higher-paying opportunities, decreasing the labor supply in the original market.
Created using AIHow does an increase in population affect the labor supply curve?
An increase in population directly affects the labor supply curve by shifting it to the right. This is because more people in the population mean more individuals available to work, thereby increasing the overall supply of labor. This shift can result from various factors, such as higher birth rates, lower death rates, or increased immigration. As the labor supply increases, it can lead to changes in market equilibrium, potentially affecting wages and employment levels.
Created using AIHow do demographics influence the labor supply?
Demographics significantly influence the labor supply. The proportion of working-age individuals (typically 18-65 years) in the population is a key factor. A higher proportion of people in this age range increases the labor supply. Historical trends, such as the entry of baby boomers into the workforce in the 1970s and 1980s, led to a substantial increase in labor supply. Additionally, the increasing participation of women in the workforce since the 1960s has also expanded the labor supply. These demographic changes can shift the labor supply curve to the right, indicating an increase in available labor.
Created using AIWhat impact do alternative opportunities have on labor supply?
Alternative opportunities in other labor markets can significantly impact labor supply. If wages increase in a similar or related market, workers may leave their current jobs to pursue these higher-paying opportunities, decreasing the labor supply in the original market. For example, if wages for pastry chefs rise, pizza chefs might switch to become pastry chefs, reducing the labor supply in the pizza industry. Conversely, if wages decrease in the alternative market, workers may return to their original jobs, increasing the labor supply in that market. This dynamic highlights the importance of wage levels and job opportunities in influencing labor supply.
Created using AIHow has the entry of women into the workforce affected labor supply?
The entry of women into the workforce has significantly increased the labor supply. Historically, most women were homemakers, but since the 1960s, more women have joined the workforce. This demographic shift has expanded the pool of available labor, shifting the labor supply curve to the right. The increased participation of women in the labor market has had profound effects on economic growth, household incomes, and overall labor market dynamics. This trend continues to shape labor supply and demand in various industries.
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