Question

Does the United States’ labor supply tend to be more elastic or more inelastic? Explain and compare the two, which seems more convincing to you? Justify your answer.

Answer 1

- Labor force in a country refers to the portion of the working age population ,over the age of 16, that is employed or is available for work but not working

- The larger the supply of labor, the more output the economy can produce. The labor supply depends on growth in the population, the labor force participation rate (the percentage of the population working or looking for work), and net immigration.

- Labor Supply Growth in the number of people available for work (quantity of workforce) is an important source of economic growth and partially accounts for the superior growth performance of the US economy.

- Numerous studies with respect to tax assessment, social security nets, and the redistribution of pay are structured dependent on presumptions about the since quite a while ago pursue impact of duty wage rates on labor supply.

- For men, huge numbers of the appraisals of this elasticity of labor supply recommend values close to zero, suggesting that lasting compensation increments have generally little impacts on labor provided. Which means the labor supply is largely inelastic.  

- The studies reveal that since quite a while ago run uncompensated elasticity of labor supply is - 0.23, and that the pay impacts of a passage increment command the replacement impacts. This outcome is predictable with a wide assortment of chronicled proof that proposes that the huge increments in genuine wages found in the United States since 1879 have been joined by critical decreases in yearly hours worked per labor.