Question

The supply and demand curves for labor can shift. Use at least two different examples of positive and negative shifts of the demand and supply curves and explain why these shifts occur.

Answer 1

Demand curve of labor is negatively sloped which shows inverse relationship between wage and quantity of labor demanded.

Supply curve of labor is positively sloped which shows positive relationship between wage and quantity of labor supplied.

Technological change shifts the demand curve of labor rightwards because firm needs skilled people who can produce good with new technology.

Immigration of labor from other others increases the supply of labor in the market and thus shifts supply curve of labor rightwards.

Emigration of labor force shifts supply curve of labor and number of labors decreases in the market.

Change in government policy i.e. increase in taxation decreases the demand of labor in the market and shifts demand curve leftwards.