Determinants of Labor Supply (SL)
Definition
Determinants of Labor Supply refer to factors that influence individuals' decisions on how much labor they are willing and able to provide at different wage rates.
Analogy
Imagine you have a part-time job as a tutor. The determinants of labor supply would include factors like the wage rate, availability of other job opportunities, and personal preferences for leisure time.
Related terms
Income Effect: This effect occurs when an increase in wages leads individuals to work fewer hours because they can afford more leisure time.
Substitution Effect: The substitution effect happens when individuals choose to work more hours due to higher wages, as it becomes more attractive compared to other activities.
Labor Force Participation Rate: This term refers to the percentage of the working-age population that is either employed or actively seeking employment.
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