Lecture

Supply Analysis: Elasticity and Wage Adjustments

Graph Chat

Chat with Graph Search

Ask any question about EPFL courses, lectures, exercises, research, news, etc. or try the example questions below.

DISCLAIMER: The Graph Chatbot is not programmed to provide explicit or categorical answers to your questions. Rather, it transforms your questions into API requests that are distributed across the various IT services officially administered by EPFL. Its purpose is solely to collect and recommend relevant references to content that you can explore to help you answer your questions.

In course

ENV-471: Environmental economics

Introduction to economic analysis applied to environmental issues: all the necessary basic concepts, including cost-benefit analysis, for environmental policy making and its instruments (examples: climate, waste, mobility). Introduction to financial calcul ...

Description

This lecture focuses on the analysis of supply elasticity in the context of a temporary employment agency providing student labor to agriculture. The instructor presents data on hourly wages and the corresponding hours of labor supplied over a year. The relationship between wage rates and labor supply is examined, emphasizing that the supply of hours is primarily influenced by the wage rate. The instructor explains how to calculate the elasticity of supply using a derived supply function, which is represented graphically. The lecture includes practical exercises, such as determining the necessary wage increase to attract a 5% increase in student hours. The instructor discusses the implications of elasticity values, illustrating how different wage levels affect the required percentage change in wages to achieve desired changes in labor supply. The session concludes with a broader application of elasticity concepts to various economic scenarios, reinforcing the importance of understanding supply dynamics in labor markets.

Instructor

Philippe Thalmann

Philippe Thalmann was born in Lausanne in 1963. He graduated in Economics from the University of Lausanne in 1984, where he earned a postgraduate diploma in Economics in 1986. Mr. Thalmann entered the doctoral program in Economics of Harvard University (Cambridge, U.S.A.) in 1986, which he completed with a Ph.D. in 1990. His dissertation is entitled: "Essays in the Economics of Government Revenues and Spending". Returning to Switzerland, he was hired as an assistant professor first at the University of Geneva (teachings in Public Economics), then at the University of Lausanne (teachings in Econometrics and Introductory Economics). Since 1994, Mr. Thalmann is associate professor of Economics as the Swiss Federal Institute of Technology at Lausanne.

Official source

Ontological neighbourhood

Economics

Microeconomics: Labor economics

Related concepts (32)

Supply and demand

In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.

Minimum wage

A minimum wage is the lowest remuneration that employers can legally pay their employees—the price floor below which employees may not sell their labor. Most countries had introduced minimum wage legislation by the end of the 20th century. Because minimum wages increase the cost of labor, companies often try to avoid minimum wage laws by using gig workers, by moving labor to locations with lower or nonexistent minimum wages, or by automating job functions.

Living wage

A living wage is defined as the minimum income necessary for a worker to meet their basic needs. This is not the same as a subsistence wage, which refers to a biological minimum, or a solidarity wage, which refers to a minimum wage tracking labor productivity. Needs are defined to include food, housing, and other essential needs such as clothing. The goal of a living wage is to allow a worker to afford a basic but decent standard of living through employment without government subsidies.

Wage slavery

In the capitalist mode of production, wage slavery (or starvation wages) refers to the exploitation of labor by keeping wages low or stagnant in order for a business to maximize its surplus value. Wage slavery can be loosely defined as a person's dependence on wages (or a salary) for their livelihood, especially when wages are low, treatment and conditions are poor, and there are few chances of upward mobility.

Cross elasticity of demand

In economics, the cross (or cross-price) elasticity of demand measures the effect of changes in the price of one good on the quantity demanded of another good. This reflects the fact that the quantity demanded of good is dependent on not only its own price (price elasticity of demand) but also the price of other "related" good. The cross elasticity of demand is calculated as the ratio between the percentage change of the quantity demanded for a good and the percentage change in the price of another good, ceteris paribus:The sign of the cross elasticity indicates the relationship between two goods.

Related lectures (50)

Labor Market Equilibrium Analysis

Analyzes labor market equilibrium, tax impacts, and steady-state hours.

Gasoline Demand Analysis: Case Studies and Elasticity

Analyzes gasoline demand in Switzerland, focusing on price changes and their effects on consumption.

Basics-3-Market-Part1-2024-02-26

Demand and Supply Curves

Covers movements along and shifts of demand and supply curves, explaining price impacts and investment analysis principles.

Market Economy: Equilibrium and State Interventions