All else equal, a decrease in the supply of labour will shift the labour supply curve to the left and decrease the equilibrium wage.

Question

Quizplus · Accepted Answer

A decrease in the supply of labour will indeed shift the labour supply curve to the left, but this will increase the equilibrium wage, not decrease it, because employers will have to pay more to attract the smaller number of available workers.

All Else Equal, a Decrease in the Supply of Labour