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Wage elasticity of supply is the grade of influence on the supply of labor caused by a change of wages. This change could either be a fall in wages, or an increase of wages.
To find out how strongly the supply of labor reacts on a shift in income, one could work out the wage elasticity of supply, and so, see if a certain change in salary would influence the supply of labor.
To work out the wage elasticity of supply one uses the following formula:
Change of supply of labor in % / Change of salary in %
Should it be the case that the outcome of the formula with certain data is higher than 1, then the supply of labor concerned is called ‘salary with an elastic demand’, meaning that a certain change in salary has a rather strong influence on a certain supply of labor.
In most cases, the supply of labor has a fairly inelastic demand, which means that a change in salary has a relatively small impact on the supply of labor, this often depends on different professions. For example, if the wage of a doctor increases, there will not immediately be a very big raise in doctors, since the duration of medical studies is rather long. On the other hand, it does not take long to achieve qualification to practice a profession like window cleaner or nightman. Therefore, the short-term wage elasticity of supply will be higher than for example a doctors’; as soon as there would be a significantly high raise in salary for window cleaners, the supply of labor in the labor sector of window cleaners will increase quickly; it does not take long to become a window cleaner.