The labor market has _________ influence on substitutability.

Question

Quizplus · Accepted Answer

The labor market has a large influence on substitutability as wages and labor availability can impact the ability to switch between different types of labor. For example, if there is a shortage of skilled workers, it may be difficult for firms to switch to using more skilled labor and they may have to substitute with less-skilled workers or automation. On the other hand, if there is an abundance of skilled workers, firms may be more likely to substitute with skilled workers rather than investing in automation.

The Labor Market Has _________ Influence on Substitutability