Question

Consider the long-run labor market for married female workers. In the 1950s, many employers had a policy of not hiring married women (and of even firing female employees when they married). How would the end of such policies affect the normal real wage and employment of married women working outside the home?

Answer 1

The monopsony is the market structure where there is only one buyer and many sellers. This market structure is seen in the labor market where the firm acts as a consumer and the workers are sellers. The monopsony outcome like monopoly is not socially optimum and increases loss. The wage rate and employmnet is lower than perfectly competitive labor market. In monopsony the firm set number of labor should be hires according to MC=VMP and charges a wage rate from the labor supply curve.

Assuming a upwaard rising labor supply of marries woman, the policy where only few firm hires married women should have some kind of monopsony power over the labor market. thus the wage rate and employmnet both should be low than social optimum. After the abolition of the policy, the market will deviates tward perfect competition with many firms wanted to hire marries women. This will increase both employmnet and wage rate for the married women.