Right, I (mis?)took the OP to be arguing âreducing salaries wouldnât have an effect on labour supply, because it is price inelasticâ, instead of âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.
Aside:
Iâd expect a reduction but not a drastic one. Like Iâd predict Open Philâs applicant pool to drop to 500-600 from 800 if they cut starting salary by $10k-$15k.
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%). Although a crisp comparison is hard to find, in the labour market you see figures generally <1, so this expectation slightly goes against the OP, given it suggests EA applicants are more compensation sensitive than typical.
âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.â
Right, this^ is what I mean.
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%).
Oh, interesting.
It was a rough, off-the-top-of-my-head prediction, so I wouldnât give the specific numbers too much weight.
That said, thereâs probably a gradient of applicant income elasticity here (and in most places? I donât know very much about labor economics).
Iâd expect dropping salaries by $10k to reduce the applicant pool substantially, and by $20k to reduce it somewhat more. But thereâs probably a hard core of applicants whose demand is quite inelastic (i.e. who would be excited to apply to EA jobs regardless of whether they paid $35,000 or $70,000).
And probably also thereâs some lower bound where anything under it is too little to live on, such that setting salaries under that threshold would cause a sharp drop-off in applications.
Right, I (mis?)took the OP to be arguing âreducing salaries wouldnât have an effect on labour supply, because it is price inelasticâ, instead of âreducing salaries wouldnât have enough of an effect to qualitatively change oversupply.
Aside:
This roughly cashes out to an income elasticity of labour (/âapplicant) supply of 1-2 (i.e. you reduce applicant supply by ~20% by reducing income ~~10%). Although a crisp comparison is hard to find, in the labour market you see figures generally <1, so this expectation slightly goes against the OP, given it suggests EA applicants are more compensation sensitive than typical.
Right, this^ is what I mean.
Oh, interesting.
It was a rough, off-the-top-of-my-head prediction, so I wouldnât give the specific numbers too much weight.
That said, thereâs probably a gradient of applicant income elasticity here (and in most places? I donât know very much about labor economics).
Iâd expect dropping salaries by $10k to reduce the applicant pool substantially, and by $20k to reduce it somewhat more. But thereâs probably a hard core of applicants whose demand is quite inelastic (i.e. who would be excited to apply to EA jobs regardless of whether they paid $35,000 or $70,000).
And probably also thereâs some lower bound where anything under it is too little to live on, such that setting salaries under that threshold would cause a sharp drop-off in applications.