Draw the graph · Micro · Labor market
A child care subsidy
Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Labor demand stays put. Labor supply shifts right.
For many parents, child care is a cost of going to work. When the subsidy lowers that cost, more parents are willing to work at every wage. Labor supply shifts right. Labor demand is unchanged. The lower wage moves retailers down along their demand curve, and they hire more.
The wage falls and employment rises.
Common mistake. Some students shift labor demand, thinking the subsidy helps employers. It is paid to parents, so it changes who is willing to work. That is a supply shift.
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