Principles of Economics- Mankiw (5th) 393

Principles of Economics- Mankiw (5th) 393 - CHAPTER 18 T H...

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CHAPTER 18 THE MARKETS FOR THE FACTORS OF PRODUCTION 405 leisure is now greater, but you are also richer than you were before. You might decide that with your extra wealth you can now afford to enjoy more leisure; in this case, your labor supply curve would slope backwards. In Chapter 21, we discuss this possibility in terms of conflicting effects on your labor-supply deci- sion (called income and substitution effects). For now, we ignore the possibility of backward-sloping labor supply and assume that the labor supply curve is upward sloping. WHAT CAUSES THE LABOR SUPPLY CURVE TO SHIFT? The labor supply curve shifts whenever people change the amount they want to work at a given wage. Let’s now consider some of the events that might cause such a shift. Changes in Tastes In 1950, 34 percent of women were employed at paid jobs or looking for work. In 1998, the number had risen to 60 percent. There are, of course, many explanations for this development, but one of them is changing tastes, or attitudes toward work. A generation or two ago, it was the norm for
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