An economy undergoes a significant structural change where a large portion of the workforce transitions from stable, long-term employment to less secure, on-demand contract work. This new type of work generally offers fewer benefits and less job security. Based on this change alone, what is the most likely immediate impact on the economy-wide wage-setting curve?

Labor Market Deregulation and Wage Dynamics

The proliferation of flexible, short-term contract work, characteristic of the gig economy, leads to an upward shift in the economy-wide wage-setting curve because it increases workers' bargaining power by offering more diverse employment options.

The Gig Economy's Influence on Labor Market Dynamics