Wage Elasticity of Labor Supply - Explained
What is Wage Elasticity?
Written by J. Mance Gordon
Updated at April 23rd, 2024
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What is Wage Elasticity?
The concept of elasticity applies to any market, not just markets for goods and services. In the labor market, for example, the wage elasticity of labor supply—that is, the percentage change in hours worked divided by the percentage change in wages—will reflect the shape of the labor supply curve. Specifically:
Elasticity of labor supply = % change in quantity of labor supplied
The wage elasticity of labor supply for teenage workers is generally fairly elastic: that is, a certain percentage change in wages will lead to a larger percentage change in the quantity of hours worked. Conversely, the wage elasticity of labor supply for adult workers in their thirties and forties is fairly inelastic. When wages move up or down by a certain percentage amount, the quantity of hours that adults in their prime earning years are willing to supply changes but by a lesser percentage amount.
Related Topics
- Labor Economics
- Labor Market Equilibrium
- Labor Market Efficiency
- Productivity Economics
- National Average Wage Index
- Unemployment
- Labor Force Participation Rate
- Job Openings and Labor Turnover Survey
- Labor Surplus Area - Explained
- Lump of Labor Fallacy - Explained
- Labor Force Participation Rate - Explained
- Bureau of Labor Statistics
- ADP National Employment Survey
- Labor Theory of Value - Explained
- Labor Productivity - Explained
- Wage Elasticity of Labor Supply
- Sticky Wage Theory (Economics)
Related Topics
- What is the US Labor Force?
- Out of the Labor Force
- Labor Force Participation Rate
- Establishment Payroll Survey
- Bureau of Labor Statistics
- Unemployment
- Underemployed
- Full Employment Equilibrium
- Okun's Law
- Issues with Measuring Unemployment
- Sticky Wage Theory (Economics)
- Implicit Contract Theory of Wages
- Efficient Wage Theory
- Adverse Selection of Wage Cuts Argument
- The Insider-Outsider Model
- Relative Wage Coordination Argument
- Natural Rate of Unemployment
- Frictional Unemployment
- Structural Unemployment
- Labor Productivity - Explained
- Okun's Law
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- National Average Wage Index
- Job Openings and Labor Turnover Survey
- Labor Surplus Area - Explained
- Lump of Labor Fallacy - Explained
- Bureau of Labor Statistics
- ADP National Employment Survey
- Labor Theory of Value - Explained
- Wage Elasticity of Labor Supply