Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.orgWage Changes and the Slope of the Supply Curve What would any one individual’s supply curve for labor look like?. One po
Trang 1Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.org
Wage Changes and the Slope of the Supply
Curve
What would any one individual’s supply curve for labor look like? One
possibility is that over some range of labor hours supplied, the substitution
effect will dominate Because the marginal utility of leisure is relatively low
when little labor is supplied (that is, when most time is devoted to leisure),
it takes only a small increase in wages to induce the individual to
substitute more labor for less leisure Further, because few hours are
worked, the income effect of those wage changes will be small
Figure 12.8 "A Backward-Bending Supply Curve for Labor" shows
Meredith Wilson’s supply curve for labor At a wage of $10 per hour, she
supplies 42 hours of work per week (point A) An increase in her wage to
$15 per hour boosts her quantity supplied to 48 hours per week (point B)
The substitution effect thus dominates the income effect of a higher wage
Figure 12.8 A Backward-Bending Supply Curve for Labor