7. Effect of substitutes on the demand for labor
The year is 2036. In many occupations, robots are replacing humans. As it turns out, robots make very good factory workers, but very poor guidance
counselors.
Assuming the other determinants of demand for the two services are roughly similar, you would expect the demand for human guidance counselors to
the demand for human factory workers.
be
One factor that affects the elasticity of demand for labor is its share of total production costs.
The smaller labor's share of production costs, the
the elasticity of demand for labor.