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Monopsonistic wage discrimination and employment effect under conditions of constant labor supply elasticity

Author

Listed:
  • Yeung-Nan Shieh

    (Department of Economics, San Jose State University)

Abstract

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).

Suggested Citation

  • Yeung-Nan Shieh, 2006. "Monopsonistic wage discrimination and employment effect under conditions of constant labor supply elasticity," Economics Bulletin, AccessEcon, vol. 4(32), pages 1-4.
    • Handle: RePEc:ebl:ecbull:eb-06d40013
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    References listed on IDEAS

    as
    1. 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.
    2. repec:ebl:ecbull:v:4:y:2006:i:23:p:1-6 is not listed on IDEAS
    3. 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.
    4. Sandmo, A., 1995. "Monopsonistic wage discrimination, incentives and efficiency," Labour Economics, Elsevier, vol. 2(1), pages 103-103, March.
    5. Galera, Francisco & Zaratiegui, Jesus M., 2006. "Welfare and output in third-degree price discrimination: A note," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 605-611, May.
    6. Iñaki Aguirre, 2006. "Monopolistic price discrimination and output effect under conditions of constant elasticity demand," Economics Bulletin, AccessEcon, vol. 4(23), pages 1-6.
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    More about this item

    Keywords

    Bernoulli inequality;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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