Question

6. The Elasticity of the Supply of Labor. What is it? How does this affect us? Give example.

Answer 1

Elasticity of supply of labor means to calculate how much supply of labour is changes to a change in wage rates.this is calculate supply of labor effect on the basis of changes done on the wages.As we know its all depend upon how much is labour skilled.There are three type of labor .Skilled labor which is highly efficient labor.Unskilled labour which is not efficient labor and semiskilled labour which is efficient .hence wage payment to skilled labour is higher because they are efficient and they are having enough skilled for doing work smoothly.they are like piller of company hence their wage rate is always higher.Unskilled worker wage rate is lower.

So if skills are highly complicated and takes time to achieve the target then their supply will be inelastic.

But if skills are less sensitive to change then it is highly elastic.

If we higher skilled worker we have to pay more but if we higher unskilled worker then we have to spend amount for training of these type of workers.

Hence if there is shortage of skilled labour then their wages will be higher.but if there is enough skilled labour then their wage rate will be lower.hence if supply of skilled labour is higher then its demand will go down hence wage rate also goes down.if supply of skilled labour is lower then its demand will be higher hence wages is also goes up.