The Elasticity of demand for labour - chapter 7

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  • Created on: 01-04-16 13:56
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  • The Elasticity of Demand for Labour
    • Chapter 7
    • Time
      • In the LR it is easier to substitute workers for capital equipment
      • They can reorganise working methods - elasticity of demand = more elastic in the LR
    • Availability of substitutes
      • If there are many substitutes for workers, elasticity = high (very elastic)
    • Proportion of labour costs to total cost
      • The larger the proportion of labour cost to total cost, the higher the elasticity of demand for labour
      • An increase in wage rates = a significant increase to total costs
    • Elasticity of demand for the product
      • Labour is a derived demand
      • If demand for a good is elastic, demand for its labour = elastic
    • The responsiveness of quantity demanded of labour to a change in the wage rate

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