---

The wage elasticity of a particular type of labor is more elastic if

• the price elasticity of demand for the final product it produces is large
• other factors of production can be easily substituted for this type of labor
• the supply of other factors of production is highly elastic
• the cost of employing this type of labor is a large fraction of total cost

Applications:

• airline pilots versus New York City garment workers
• union wages in the trucking industry

Cross elasticities of demand:

• gross complements and gross substitutes
• substitution and scale effects
• technological change and labor demand

---

Lecture Notes