Elasticity of Labor Supply

Elasticity of labor supply measures how responsive workers are to changes in wages. If wages increase significantly and many people choose to work more hours or enter the workforce, labor supply is considered elastic. Conversely, if changes in wages have little effect on people's willingness to work, it is inelastic. This concept helps businesses and policymakers understand how movements in wages influence employment levels and the overall labor market. Factors such as work preferences, alternative income sources, and job flexibility can influence this responsiveness.