Monopsonistic wage discrimination and employment effect under conditions of constant labor supply elasticity
This note exploits an alternative but simple way to examine the employment effect of wage discrimination when the constant elasticity labor supply curves are strictly concave. The Bernoulli inequality applied in this paper allows us to show that wage discrimination increases total employment in a relative simple way, without resorting to complicated manipulations as were used by Formby, Layson and Smith (1983) and Shieh (2001).
Volume (Year): 4 (2006)
Issue (Month): 32 ()
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- Galera, Francisco & Zaratiegui, Jesus M., 2006.
"Welfare and output in third-degree price discrimination: A note,"
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- Sandmo, Agnar, 1994. "Monopsonistic wage discrimination, incentives and efficiency," Labour Economics, Elsevier, vol. 1(2), pages 151-170, March.
- Iñaki Aguirre, 2006. "Monopolistic price discrimination and output effect under conditions of constant elasticity demand," Economics Bulletin, AccessEcon, vol. 4(23), pages 1-6.
- William M. Boal & Michael R. Ransom, 1997. "Monopsony in the Labor Market," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 86-112, March.
- Formby, John P & Layson, Stephen K & Smith, W James, 1983. "Price Discrimination, 'Adjusted Concavity,' and Output Changes under Conditions of Constant Elasticity," Economic Journal, Royal Economic Society, vol. 93(372), pages 892-899, December. Full references (including those not matched with items on IDEAS)
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