How different graphs help account for the long-term increase

Reference no: EM13213846

An alternate means of depicting the individual labor supply decision is via a graph with hours of market work (Hw) on the horizontal axis and the market wage rate (W) as well as the shadow or home wage (W*) on the vertical axis. For this question, you are to draw two of these alternate graphs. The first graph should show the situation for two women who have access to the same market wage rate, but one chooses to work in the market (an interior solution) and the other does not (a corner solution). The second graph should show the situation for two women who have the same valuation of nonmarket time (shadow wage) but different market wage rates, again with one of them choosing to work in the market and the other choosing to remain out of the labor market. Please identify equilibrium hours of work for each woman in each graph. Make sure that you label your graphs completely, and use subscripts to differentiate the two women (i.e., in each graph, you should have W1 and W2 to represent the market wage as well as W1* and W2* to represent the shadow wage, and Hw1* and Hw2* to identify equilibrium hours of work for woman 1 and 2, respectively). Provide a brief explanation of your graphs. Finally, indicate in a few sentences how these different graphs help account for the long-term increase in labor force participation of married women.

Reference no: EM13213846

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