If income effects are sufficiently strong, it may be the case that labor demand curves slope up.

Question

Quizplus · Accepted Answer

Labor demand curves typically slope downward, reflecting that as wages increase, the quantity of labor demanded decreases. The income effect relates to how changes in income affect consumption, not the shape of the labor demand curve, which is primarily influenced by the marginal productivity of labor and wage rates.

If Income Effects Are Sufficiently Strong, It May Be the Case