Final answer:
The labor demand curve is steeper in the short run mainly because wages are downwardly sticky, resulting in larger unemployment shifts when the demand for labor changes in response to the business cycle.
Step-by-step explanation:
The question pertains to the demand curve for labor and why it appears steeper in the short run as opposed to the long run. One primary determinant of the labor demand from firms is their perception of the macroeconomic conditions. If firms anticipate an economic expansion, they will be inclined to hire more workers at any given wage, causing a rightward shift in the demand curve. In contrast, if a recession is perceived, firms aim to hire fewer workers, shifting the labor demand curve to the left. This effect on employment due to economic fluctuations is termed as cyclical unemployment.
With regards to why the short-run labor demand curve is steeper, we look at the scenario where, in a recession, demand for labor shifts from Do to D₁. As wages are typically sticky downwards in the short run, they do not adjust to the new equilibrium level immediately. Hence, the quantity of labor demanded decreases from Qo to Q₂, but the wage remains at the higher, original level. This scenario illustrates more significant unemployment in the short term than would be apparent if wages could adjust downwards more quickly.