Interpretation of Backward-Sloping Labor Supply Curves in Africa

Miracle, Marvin P.

doi:10.1086/450876

Cited by 9 publications

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“…At times the concept of the levels of labour supply has been mixed with the concept of the elasticity of supply. Miracle [1976] and Miracle and Fetter [1970], for example, provide evidence on the low effective wage in the mining sector, after accounting for poor conditions and migration costs, but do little to relate this to the labour supply response to changes in the wage rate. Similarly, Arrighi's argument -that the relative 'effort price of cash income' through working in the mines was high -explains the low level of employment, but alone does not explain the low elasticity of labour supply.…”

Section: A Labour Supply Curves In Colonial Africamentioning

confidence: 99%

The labour market in a dual economy: Another look at colonial Rhodesia

Ranney

1985

The Journal of Development Studies

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Section: A Labour Supply Curves In Colonial Africamentioning

confidence: 99%

The labour market in a dual economy: Another look at colonial Rhodesia

Ranney

1985

The Journal of Development Studies

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“…Myrdal (1971) and Lipton (1983) found similarly negatively sloped labour supply among the peasant class once they reach a subsistence level of income. Likewise, Schultz (1964) and Miracle (1976) claim that poor living conditions in towns forced them to head back to their home village, once they satisfied their minimum needs. The literature attributes the lower labour supplied at higher wages by poor workers as 'irrational' .…”

Section: Introductionmentioning

confidence: 99%

(Re)investigation of Rural Women’s Labour Supply in India: The Impact of Household Poverty Status—A Panel Data Analysis

Sebastian¹

2019

Margin: The Journal of Applied Economic Research

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This article examines the role of household poverty in shaping rural female labour supply using the unique panel dataset of India Human Development Survey. The results using Vella and Verbeek’s two-step panel estimation reveal the presence of a backward-sloping labour supply curve for rural women from below poverty line households, and an upward-sloping labour supply for rural women from above poverty line (APL) households. This implies the existence of ‘forced’ or ‘need-based’ participation among poor women and justifies why they work long hours in poorly paid hazardous jobs. The article also finds horizontal labour supply among agriculture wage workers and for Adivasi and Dalit rural women to some extent, reflecting limited job options, and surplus unskilled labour who are unable to demand higher wages for their labour supply. On the other hand, when categorised by occupation type, the downward-sloping labour supply for rural women from APL households indicates the dominance of the income effect over the substitution effect, and the socio-cultural factors that gain strength as income levels increase. JEL Classification: J220, R21, J16, R230, I32

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“…Representative examples of older and more recent empirical studies that detect positive employment responses to falling wage rates in low income sectors or countries include Miracle (1976) for African regions, Rosenzweig (1980) for India, Hernández-Licona (2000) for Mexico, and Dessing (2002) for the Philippines.…”

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Wage traps as a cause of illiteracy, child labor, and extreme poverty

Gärtner

2011

Research in Economics

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When labor incomes approach subsistence levels, the labor supply curve slopes outward, because the fight for survival mandates households to look for longer work hours in response to falling wage rates. We explore conditions under which near-subsistence scenarios may imply wage traps, labor market failures that can be the cause of undernourishment, illiteracy, and child labor. After stating general conditions under which wage traps occur, we look at specific production functions typically employed in quantitative analyses of growth and development. We find that standard Cobb-Douglas production functions do not permit wage traps, whereas CES functions do. Beyond that it turns out that when subsistence requirements increase with work hours, and when work effort rises with the wage rate, up to the efficiency-wage threshold, wage traps become more likely. Measures such as bans on child labor, implementation of minimum wage laws, or the establishment of labor unions may quite effectively improve conditions in wage-trapped labor markets. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.Wage Traps as a Cause of Illiteracy, Child Labor, and Extreme PovertyDennis Gärtner * and Manfred Gärtner † August 2010Abstract When labor incomes approach subsistence levels, the labor supply curve slopes outward, because the fight for survival mandates households to look for longer work hours in response to falling wage rates. We explore conditions under which near-subsistence scenarios may imply wage traps, labor market failures that can be the cause of undernourishment, illiteracy, and child labor.After stating general conditions under which wage traps occur, we look at specific production functions typically employed in quantitative analyses of growth and development. We find that standard Cobb-Douglas production functions do not permit wage traps, whereas CES functions do. Beyond that it turns out that when subsistence requirements increase with work hours, and when work effort rises with the wage rate, up to the efficiency-wage threshold, wage traps become more likely. Measures such as bans on child labor, implementation of minimum wage laws, or the establishment of labor unions may quite effectively improve conditions in wage-trapped labor markets.JEL Classification: J2, J4, O11

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Interpretation of Backward-Sloping Labor Supply Curves in Africa

Cited by 9 publications

References 0 publications

The labour market in a dual economy: Another look at colonial Rhodesia

The labour market in a dual economy: Another look at colonial Rhodesia

(Re)investigation of Rural Women’s Labour Supply in India: The Impact of Household Poverty Status—A Panel Data Analysis

Wage traps as a cause of illiteracy, child labor, and extreme poverty

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