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Life Cycle : Wages And Incomes Have Effects On The Labor Supply Of People

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Life cycle
Wages and incomes have effects on the labor supply of people. Changes in wages has unclear effects on preferred work hours since income usually have effects on income and substitution effects in the reverse directions unless leisure is seen as an inferior good. The study on the supply of labor is focused on how the changes in the salaries and the wages affects the preferences that people have on the hours of work that is by untangling the income effects apart from those of the substitution effects (Furaker and Hedenus 2009). The estimations that are carried out on the labour supply elasticity go through a number of problems. The major problems that occur are as a result of the measurements of the errors in the non-labor income and wages, the endogeneity as a result of the non-labor income and wages or the occurrence of the correlation of the tastes that people have for work and the lack of observability of the wages of the non-workers. Therefore the labor supply will change due to the changes that occur in the non-labor income, these changes can be informative in that it tells us the income effect though such changes may occur endogenous. People, therefore, who have a resilient fondness for work and are not so fond of leisure may be in a position to mount up more wealth in terms of assets and have a higher non-labor income.
Furaker and Hedenus (2009) were able to find an uncertain result that showed the effect of a person winning a lottery on their work behaviour

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