Explain how the availability of substitutes for workers

Reference no: EM133442469

We can say there are three labor markets. The unskilled labor market (manual laborers) tends to be the most competitive as it has no entry barriers and its wages tend to be the lowest. The semi-skilled labor market (electricians, machinists, assembly line workers) is somewhat less competitive and has some moderate entry barriers (apprenticeships, master's licenses, unions) where its wages tend to be higher than in the unskilled labor market. The highly-skilled labor market (doctors, economists, lawyers & other professionals) is the least competitive and it has the highest entry barriers where wages tend to be the highest. Explain how the availability of substitutes for workers in these types of labor markets influence market activity and their equilibrium outcomes of wages and quantities of labor employed. The wage elasticity of labor demand plays a role similar to that with the price elasticity of demand in product markets.

Reference no: EM133442469

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