Language
Country/Area
No result found
The mystery of labor supply: How do changes in wages affect the hours you work?
In mainstream economic theory, labor supply refers to the total number of hours that workers are willing to work at a given real wage rate. It is usually represented by a labor supply curve, which graphs a hypothetical wage rate (vertical axis) and the amount of labor an individual or group is willing to provide at that wage rate (horizontal axis). Three unique aspects of labor supply include: the proportion of the population that is employed, the average hours worked by those who are employed, and the average hours worked by the population as a whole.
The labor supply curve arises from the labor-leisure trade-off. More working hours can lead to higher incomes, but they must reduce the leisure time enjoyed by workers, so wage changes have two main effects on labor supply.
The Neoclassical View
According to neoclassical economics, when real wages rise, the opportunity cost of leisure increases. This typically causes workers to supply more labor (the "substitution effect"). However, as real wages rise, workers can earn more for a fixed number of hours worked. If leisure is considered a normal good (i.e., the demand for leisure increases as income rises), then this increase in income will cause workers to supply less labor in order to enjoy a higher level of leisure time (i.e., “ income effect”). If the substitution effect is stronger than the income effect, the labor supply curve will be upward sloping; conversely, if above a certain wage level, the income effect is stronger than the substitution effect, the labor supply curve will be backward bending.
Individual labor supply curves can be aggregated to yield the economy's total labor supply.
Marxist perspective
From a Marxist perspective, the supply of labor is the core requirement of capitalist society. In order to avoid labor shortages and ensure a supply of labor, a large portion of the population in society must lack the resources to be self-sufficient, forcing them to sell their labor for a living. In the past, wage labor was usually undertaken by those who had insufficient land resources.
The impact of birth control pills on women's labor supply
When studying women's labor supply, it is crucial to understand the effects of birth control pills on labor supply. In recent years, two innovations in the theory of housework behavior have expanded the analysis of labor supply. First, labor supply is viewed as linked to decisions about non-market activities such as fertility, education, and marriage. Second, wages in the market and in the household are considered as selection variables, and these choices are affected by the job search, employment, and investment behavior of family members.
In 1960, the first contraceptive pill, Enovid, was introduced, completely changing the role of women in the workforce. Women have more control over family planning, which in turn gives them greater flexibility in choosing their occupations and career goals.
Furthermore, there is evidence that the Pill has had a long-term impact on labor force participation among women of all educational levels. Historically, there has been a relative lack of empirical research on oral contraceptives and their effects on female labor force participation. The introduction of the birth control pill and its subsequent widespread use coincided with a resurgence of women’s activism at the time. At the same time, abortion became more common as many young women gained access to birth control pills. Research shows that these women have experienced significant impacts on both their fertility and employment/career efforts.
According to Katz and Goldin, widespread use of the pill brought about two major economic changes. The first is the direct effect of the Pill on women's education and career choices. In the past, women who wanted to pursue higher education had to delay marriage, which came with certain social costs. They have to pay the penalty of sexual absence or risk pregnancy, which could put their investment in their careers in vain. This is called the direct effect of the pill. Second is the indirect effect mentioned by Katz and Goldin, known as the social multiplier effect, which affects both men and women. Because men now also have the opportunity to delay marriage without incurring huge social costs, this creates a larger partner pool and increases the chances of finding a more suitable match.
Along with these major changes, the dynamic structure of labor supply is also changing. Would a higher salary motivate you to work longer hours, or would you choose more free time to enjoy life?
