Wage Elasticity of Labour Supply for Males and Females

Ravindra H. Dholakia

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: Male-female wage differential in the Indian economy can be explained satisfactorily by the model of wage discriminating monopsony provided that the wage elasticities of supply of male and female labor are significantly different. In the present paper individual labor supply functions are derived by optimizing the family utility function. The corresponding elasticity functions are then examined for their implications. It is shown that infinite elasticity of labor supply implies unrealistic assumptions about the marginal utilities of money income and leisure. It is also argued that under the prevalent family system in India, the wage elasticity of labor supply for males is likely to be higher than the one for females. The observed phenomenon of female workers being paid a lower wage rate than male workers of equal skill, qualification and experience can, therefore, be explained by the model of wage discriminating monopsony in the labor market.

Date: 1987-11-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp00791

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