The amount of total work people are willing and able to perform in the market is determined by how much labor each worker offers collectively.
In the labor market, a vast number of workers supply labor. The total quantity of work that is offered by labor is based on the prevailing wage level. The relationship between wages and the quantity of labor supplied by all workers in the market is depicted by the market supply curve of labor.
The Upward-Sloping Labor Supply Curve
The labor supply curve generally slopes upward, which indicates that higher wages lead to an increase in the quantity of labor supplied, assuming other factors remain constant. Conversely, lower wages reduce the quantity of labor supplied under the same conditions.
Higher wages incentivize individuals to supply more labor by increasing their income and raising the opportunity cost of leisure. Higher wages attract new workers into the labor market and encourage current workers to work additional hours. In analyzing labor supply, it is often convenient to assume that the change in the quantity of labor supplied primarily reflects an increase in the number of workers rather than just changes in hours worked.
From Chapter 13:
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