Wage elasticity of labour supply for males and females

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 labour are significantly different. In the present paper individual labour supply functions are derived by optimizing the family utility function. The correspoding elasticity functions are then examined for their implications. It is hown that infinite elasticity of laboursupply 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 labour 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, qualificaiton and experience can, therefore, be explained by the model of wage discriminating monopsony inthe labour market.