Question

The labor supply for players on the PGA (Professional Golfers’ Association)is individually determined. After qualifying for the PGA tours, individual players choose the number and location of events they enter during a season. In their paper published in Managerial Finance, authors Gilley and Chopin find that holding other factors constant, “higher paid professional golfers tend to enter fewer tournaments (supply less labor) as their wage rates(earnings per event entered)rise.”(Gilley and Chopin, 2000) Use the labor supply model to explain why we may observe this phenomenon. You may compare the labor of lower paid professional golfers to higher paid professional golfers.

Answer 1

In general at low wage levels the substitution effect dominates the income effect and higher wages cause an increase in the supply of labour.If the case is succh that the supply curve of labour will shift in response to change in the same factors that shift demand for goods and services.Minimum wage for the players on PGA behaves as a claasical price floor on labour. If wages set above the equilibriumprice, more labour will be willing to be provided by workers than will be demanded by employers, creating surplus of labour that is unemployment.Actually by raising the minimum wage will stimulate consumer spending, helps business bottom lines, and grow the economy.

Minimum wage reduce jobs.Targeted credits do a better job of reaching the poor than minimum wages do.In the case ofPGA higher paid golfers tend to enter fewer tournament because an increase in the wages causes a decrease(leftward shift) of the short run aggregate supply curve. A decrease in wages causes an increase(rightward shift) of the short run aggregate supply curve.Higher wages increase the overall cost of production. Lower wages decrease the overall cost of production.Labour supply curves derive from the labour-leisure trade off.If beyond a certain wage rate, the income effect is stronger than the substitution effect, then the labour supply curve benda backward.

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