Question

Does the United States’ labor supply tend to be more elastic or more inelastic? Explain the...

Does the United States’ labor supply tend to be more elastic or more inelastic? Explain the competing theories . Which seems more convincing to you? Explain your answer.

Homework Answers

Answer #1

US has demonstrated elasticity in supply of labor as increase in wage rate has caused higher demand for job opportunities and increase labor supply arithmetically.

However, competitive theories suggest higher elasticity due to rise in wages causes employers to layoff massively and thus creates unemployment which reduces the overall demand in markets.

The competitive theory is more practical as firms incur losses due to rise in wages and thus layoff redundant workers causing unemployment to rise considerably and reducing overall demand.

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