Shifts in Labor Supply

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
92 4 • Labor and Financial Markets

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. Table 4.3 lists some of the

factors that will cause the supply to increase or decrease.

Factors

Results

Number of

Workers

Required

Education

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
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