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The Labour Supply Curve: A Pluralist Approach to Investigate its Measurements

Published online by Cambridge University Press:  01 January 2023

Donatella Cavagnoli
Donatella Cavagnoli*
Affiliation:
University of Ballarat, Australia
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Abstract

The neoclassical theory of labour supply cannot unambiguously explain the decision of highly-skilled high-wage male workers to work longer and harder than their counterparts in the 1980s. We investigate the labour supply elasticities of these workers, over time, and across countries, within a ceteris paribus condition. The estimates reveal a shift rather than a movement along the supply curve. We find that ambiguities are due to the absence, in the theory, of a clear distinction between a change in consumption that is partly due to changes in the wage rate and partly due to changes in purchasing power. We apply a new pluralist approach to the standard income-leisure choice framework and provide for a more systematic and consistent method of measuring variations in labour supply, with policy implications.

Keywords

J01D01H31Compensated wage elasticitycost price of leisureincome (-consumption) leisure choice frameworkreservation wageuncompensated wage elasticity
Type
Article
Information
The Economic and Labour Relations Review , Volume 23 , Issue 3 , September 2012 , pp. 71 - 87
Copyright
Copyright © The Author(s) 2012

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