Question

List the factors that cause an increase in labor demand (that is a shift in the labor demand schedule to the right). List the factors that typically cause an increase in labor supply (that is a shift in the labor supply schedule to the right).

Answer 1

Factors that shift the labour demand function to the right include an increased price for the product manufactured by the labour, increased productivity due to technology, increase in the consumer demand, increase in employment subsidy by the government, an increase in the portion of health insurance contributed by the government. These factors positively affect the labour demand

Labour supply can be affected positively by the following factors. Change in the preferences of workers favourable for working and unfavourable for leisure, changes in government regulation so that some of the previously mandatory regulations like licensing are not required, increase in the education training and other skill development programme, decline in the accumulated wealth, etc.