Question

Give real life examples of a sector with elastic labour demand and a sector with inelastic labour demand and explain why there are differences between the demand elasticity in these two sectors.

Answer 1

Sector with elastic demand is agriculture labor and construction labor, here in these sectors as the wages rise the supply of labor increases immediately and if the wage demand are increased the employer will quickly look for other sector.

Sector with inelastic labor supply are highly qualified labors like NASA employee or Apple research people. Here the market is inelastic i.e. even If the wages increase the supply of labor will not increases immediately because it takes considerable training and qualification to be part of these.

The difference is because of the input it goes for the labor force, in the construction and the agriculture sector it will be elastic because anyone can step in as a labor here, its completely different with the qualified labor force.