Analyse the Factors Which Will Affect the Elasticity of Supply of Labour

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The elasticity of supply is the responsiveness of the supply of labour to a change in the wage rate, for example a brain surgeon and waitress. Elasticity of supply of labour = % change in the quantity of labour supplied/% change in wage It shows how flexible a labour market is to enter and exit. As shown in Fig.1 an inelastic labour market has a steeper supply of labour of labour curve as it is not easy to enter the market usually due to the high skill levels needed for instance brain surgeons and how long the investment in human capital will take before the economic agent can enter the market with the required skill, however an elastic labour market has a much less steep labour supply curve showing that the market is easier to enter and exit due to lower levels of skill needed and is usually a job like a waitress. An increase in wage rate in an inelastic labour market will have very little effect on the amount of labour supplied however in the elastic market a small wage increase leads to a large effect on the amount of labour supplied. Take the Brain surgeon and waitress for example. A rise in the wage rate will not attract many new brain surgeons in the short run as they train for a long period of time making it hard to attract new workers in the short run due to there not being the supply and also there are high qualifications needed to start the training which is rather hard to acquire due to not all students being able to achieve these qualifications thus supply again is low relative to demand. The inelastic supply of a brain surgeon is shown in fig.1. In contrast we can see that in fig.2 that the supply and demand for waitresses is elastic due to how low the qualifications and skills that are needed to do the job and also how short the training is making it easy to employ in the short run. Another factor affecting the

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