Wage Elasticity of Labour Demand | 60 Second Economics
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Wage Elasticity of Labour Demand | 60 Second Economics
Why do some businesses cut lots of jobs when wages rise while others barely change staffing at all? It all comes down to the wage elasticity of labour demand: how sensitive firms are to wage changes. If labour is a big cost, or easy to replace with machines, demand becomes elastic. If not, hiring barely changes. Let’s break it down in 60 seconds.
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