Question

Show by the use of a graph and explain the crowding hypothesis in the labour market.

Answer 1

Figure-1 in one of the documents attched below illustrates the impact of job crowding on male-dominated jobs in the labor market. The y and x axes in figure-1 represent the wage rate and labor quantity respectively denoted as w and Q(L). The initial labor demand curve and supply curve for male dominated jobs are labeled as D(L)1 and S(L)1 respectively and the initial equilibrium wage rate and labor quantity in male dominated jobs are denoted as w*1 and Q*(L)1 respectively corresponding to the intersection of D(L)1 and S(L)1 curves. Now, as various social and demographic causes restrict women to enter into male dominated professions and jobs, the overall labor supply for male dominated jobs decreases which has been depicted in figure-1 as a leftward or upward shift of the labor supply curve for male dominated jobs in labor market from its initial position S(L)1 to S(L)2 and hence, the equilibrium wage rate in male dominated jobs or professions increases from w*1 to w*2 and the equilibrium labor quantity decreases from Q*(L)1 to Q*(L)2 respectively corresponding to the intersection between D(L)1 and S(L)2 curves. Therefore, the crwiding out effect causes the wage rate to increase and the overall labor quantity to decease in the labor market for male dominated jobs.

On the other hand, figure-2 illustrates the effect of job crowding in the labor market particularly for the female dominated jobs. Again, the initial demand and supply curves for female dominated jobs are labeled as D(L)1 and S(L)1 curves respectively and the initial equilibrium wage rate and labor quantity of female dominated jobs in the labor market are denoted as w*1 and Q*(L)1 corresponding to the intersection between D(L)1 and S(L)1 curves. No, the social and demographic restrictions for women ti take up male dominated jobs and professions would consequently cause an excess supply of female workers for female dominated jobs and professions. This would lead to a increase in the overall supply of labor for female dominated jobs in the labor market as depicted by a rightward shift of the labor supply curve for female dominated jobs from its initial position at S(L)1 to S(L)2. This would consequently cause the equilibrium wage rate for the female dominated jobs in the market to decrese from w*1 to w*2 and the equilibrium quanity of labor for female dominated jobs in the market to increase from Q*(L)1 to Q*(L)2. Hence, the job crowding in the labor market causes the wage rate for female dominated jobs to decrease and the overall labor supply for these jobs to increase.