Describe two factors that affect labor supply and two factors that affect labor demand. Using economic principles, describe how changes in the labor market have affected you or someone you know.

This sounds like a homework question.

Think about it. What reasonable things affect the labor supply, i.e. the supply of people who work? What things prevent people from getting jobs or keeping their jobs? What causes layoffs?

Then, think about the labor demand. What things affect what kind of jobs companies can offer? What things influence what jobs are available or not available? Or even disappear? For instance, the U.S. used to be a huge manufacturing country. Pittsburgh, Gary IN, and Chicago had big steel mills. Those steel mills are mostly gone now. Who is doing that kind of labor today to produce the steel the world needs? Why?

The changes in the labor market have greatly affected us. Buy a cell phone or a DVD player or a iPod and call the technical service number if you are having problems with your new purchase. You will quickly find out about a few changes in the labor market!

1. Taxes lower the incentives to work which lower labor supply
2. Welfare payement also lower the incentive to work lowering labor supply

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Originally Posted by Akeemite

1. Taxes lower the incentives to work which lower labor supply
2. Welfare payement also lower the incentive to work lowering labor supply

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Sounds like a political answer

Labour supply is affected by available skills, mobility, demographics, location and wage levels

Labour demand is affected by job vacancies and economic activity

Although their effect might not be readily apparent or intuitively obvious, Akeemite's two factors are indeed among the many which influence labor supply.

Assuming the first refers to a tax which is at least partially borne by labor (e.g. income, payroll), the effect is a reduction in the price received by labor in exchange for its services. Willing supply then falls below what otherwise would have been the equilibrium point.

It's easier to see by noting that the cost of not working is measured by one's after-tax income. Lower AT income = lower cost of not working.

Welfare payments also have a disincentive influence on supply. Generally, the opportunity cost of working is the sum of the value I place on my leisure time, plus any welfare amount I might receive for not working. Any increase in the latter, ceteris paribus, invokes an increase in my opp'y cost of working.

Put another way, the benefit of working is the net spread of the paid wage over any welfare rate that might otherwise be obtained. An increase in the latter narrows the spread.

The real question, though, is why are we 'laboring' over a 4 ½ - year - old thread? :-)

Cheers, all!

Because akeemite answered it yesterday so who bothers to check the date. It would be helpful if the original date was prominently displayed on the board or if threads expired after a certain time

Roger that... yeah, I was asking a bit tongue-in-cheek anyway. I saw that Akeemite had resurrected a rusty old thread, but figured that as long as somebody had pulled it out of the old toybox anyway, might be fun to kick it around a couple of times.

Take care, comrade, and see you around the forum.

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