What Causes Shifts in the Supply Labor?

The supply of labor is upward-sloping and adheres to the law of supply: The higher the price, the greater the quantity supplied and the lower the price, the less quantity supplied. 

The supply curve models the tradeoff between supplying labor into the market or using time in leisure activities at every given price level. The higher the wage, the more labor is willing to work and forego leisure activities. 

A change in salary will lead to a movement along labor demand or labor supply curves, but it will not shift those curves. 

Some of the factors that will cause the supply to increase or decrease include: 

Number of Workers – An increased number of workers will cause the supply curve to shift to the right. An increased number of workers can be due to several factors, such as immigration, increasing population, an aging population, and changing demographics. Policies that encourage immigration will increase the supply of labor, and vice versa. Population grows when birth rates exceed death rates. This eventually increases supply of labor when the former reach working age. An aging and therefore retiring population will decrease the supply of labor. Another example of changing demographics is more women working outside of the home, which increases the supply of labor

Required Education – The more required education, the lower the supply. There is a lower supply of PhD mathematicians than of high school mathematics teachers; there is a lower supply of cardiologists than of primary care physicians; and there is a lower supply of physicians than of nurses.

Government Policies – Government policies can also affect the supply of labor for jobs. Alternatively, the government may support rules that set high qualifications for certain jobs: academic training, certificates or licenses, or experience. When these qualifications are made tougher, the number of qualified workers will decrease at any given wage. On the other hand, the government may also subsidize training or even reduce the required level of qualifications. For example, government might offer subsidies for nursing schools or nursing students. Such provisions would shift the supply curve of nurses to the right. In addition, government policies that change the relative desirability of working versus not working also affect the labor supply. These include unemployment benefits, maternity leave, child care benefits, and welfare policy. For example, child care benefits may increase the labor supply of working mothers. Long term unemployment benefits may discourage job searching for unemployed workers. All these policies must therefore be carefully designed to minimize any negative labor supply effects.

Related Topics

• Labor Economics
• Labor Market Equilibrium
  
• Labor Market
• Labor Market Equilibrium
• Labor Market Efficiency
• Price, Supply, and Demand in the Labor Market
• Equilibrium Wage
• Shifts in the Demand for Labor
• What Causes Shifts in the Supply Labor?
• How Technology affects Demand for Labor?
• Minimum Wage as a Price Floor in the Labor Market
• What is the First Rule of Labor Markets?
• Labor Demand in Perfectly Competitive Markets
• Imperfect Competition in Labor Markets
• Monopsony
• Oligopsony
• Labor Market Power of Employers
• What is the marginal Cost of Labor?
• Labor Market Power of Employees
• What is a Bilateral Monopoly in a Labor Market?
• Wage Elasticity of Labor Supply
• Equilibrium in Supply and Demand in Labor Markets
• Shifts in Supply and Demand in Labor Markets