A company decides to increase its wages significantly to attract more skilled workers. However, after the wage increase, they observe a decrease in the number of applicants. Which category does this scenario best fit regarding labor demand dynamics?

This scenario fits into the category of labor demand dynamics known as "wage elasticity of labor supply. " When the company raised wages, they expected to attract more skilled workers, but instead, they saw fewer applicants. This can happen if potential workers believe the higher wages come with greater job expectations or if they think the work environment may not be worth the extra pay. For example, if a company offers a high salary but has a reputation for long hours and stress, skilled workers might choose not to apply despite the pay increase. In this case, the relationship between wages and the number of applicants is not straightforward, showing that higher wages do not always lead to more interest in the job.