Alright. So now let's consider some of the factors that could shift the supply of labor. Alright. We saw shifts in the demand, now let's see shifts in the supply. So the first one that can shift supply is the size of the population, okay? So you can imagine if there's more people in the population, there's going to be more supply of labor, right? It's going to have a direct effect there. If the population increases, labor supply shifts to the right. In red. Labor supply shifts to the right and this can be from a few different places, right, immigration into your country, more people in the country or if the births exceed the deaths, right, that's usually the case where we see there's more people being born than dying so there's generally an increase in that labor over time. Okay. And obviously the opposite, if the population decreases, well, we're going to have a shift to the left. There's just fewer people working. Okay. Let's go on to this one here, demographics. So the demographics of the labor force also affect the labor supply. So the more people that are what we call a working age which is usually you know between let's say 18 and 65 here in the US, the greater the supply of labor, right? The more people that are in that age range, then there's going to be more people working. So this happened a great example was in the 1970s and 1980s, that's when the baby boomers, that generation finally hit the working age and we saw a huge increase in the supply of labor. Another example here, which doesn't really have to do with the working age, but it has to do with demographics of the workforce is women in the workforce. When you think of back at the turn of the 20th century, the early 1900s, most women were homemakers, there were big families, so they usually needed the wife to stay home, take care of the kids, take care of the house and there was usually enough money being made by just the husband, just the male going to work and being able to provide for the family. As we see over time, right, we're seeing more and more women in the workforce, we're seeing that every day it's increasing, and that's been happening since about the sixties and seventies. We've been seeing more and more women in the workforce. So the demographics, that's also going to affect the supply of labor. And the last one here, the availability of alternative opportunities. So let's think about that. This is opportunities in other labor markets, alright? So now let's think about a specific labor market. Let's say you are a pizza chef, right? You could also take your skills to go become a pastry chef or something. I know that pastry chefs, it's a little more delicate, but let's just say they're substitutes, right? You could work make pizzas, or you can go bake pastries. So you can imagine if the wage increases in a similar market, so you're over there making pizzas and now you hear that the wage for pastry chefs has gone way up, well the supply of labor in the first market is going to decrease, right? So the supply of labor in the pizza market is going to decrease when the wage goes up in the pastry market, right? Does that make sense? That's because people are going to leave the pizza market to go work as pastry chefs instead to make more money. And the opposite if the wage decreases so if now they're paying less for pastry chefs, those pastry chefs are going to come over to the pizza industry and start making pizzas. So we'll see an increase in the first market, right? So you got to think about the other market, what's happening there and how that affects our market. Okay? So I got an example there. Well, I like my example now better maybe the pizza and the pastry chefs, but apple pickers and orange pickers, right? That's a good example. If the price of the wage paid to apple pickers goes way up, you can imagine that orange pickers probably have a lot of the same skill set needed to pick apples. Well, they're going to stop picking oranges and go take the higher wage picking apples. Alright, so let's go ahead and do some practice problems related to this and then we'll move on to the next topic.
15. Markets for the Factors of Production
Shifts in Labor Supply
15. Markets for the Factors of Production
Shifts in Labor Supply - Video Tutorials & Practice Problems
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concept
Shifts in Labor Supply
Video duration:
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Video transcript
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Problem
ProblemA low birthrate in Japan led to a general increase in the age of the population in the country. During the 1990s, this led to a decrease in the number of working age people in Japan. What would we expect to occur in the labor market?
A
Labor demand increases
B
Labor demand decreases
C
Labor supply increases
D
Labor supply decreases
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Problem
ProblemThe wages paid to pastry and sous chefs are $15 and $25, respectively. If pastry and sous chefs are alternative opportunities and the sous chef wage increased to $30, what would occur in the labor market for pastry chefs?
A
Labor demand increases
B
Labor demand decreases
C
Labor supply increases
D
Labor supply decreases