Reasons for the Positive Slope of the Labor Supply Curve
An increase in the wage affects the quantity of labor supplied in three ways:
- An increase in hours worked per worker
- Occupational choice: a higher wage will attract workers to that occupation
- Migration: people will move to the city where wages in a given occupation are higher
The first effect is uncertain, but the second and third effects carry sufficient weight to make the supply curve positively sloped.