Revisiting Labor Supply Effects of Sex Ratio, Income, and Wage. Effects of Marriage-Related Laws

Abstract

This chapter examines further implications of an analysis of WiHo (Work-In-Household) markets for time allocation when there are many types of substitutable individuals in multiple markets for WiHo acting either as WiHo-workers or as WiHo-users. Income effects on labor supply are revisited: the availability of multiple types of men and women, and the possibility of divorce and remarriage, imply that when income changes there is less need for WiHo-workers to accommodate spouses than there was in the case of only one type of spouse. It is also predicted that any factor associated with higher market value of WiHo workers is expected to be associated with more sizeable negative household income effects on WiHo-workers’ labor supply. Furthermore, wage effects on labor supply are revisited: it is predicted that the larger the positive correlation between WiHo price and wage in a group of women acting as WiHo-workers, the lower the observed elasticity of labor supply. The possibility of distinguishing between married and unmarried individuals also leads to the prediction that relative to situations of low sex ratios or balanced marriage markets, high sex ratios are expected to be associated with less labor force participation by married women. The analysis also implies that many laws and regulations will affect marriage market conditions and therefore labor supply. I briefly consider potential effects of laws regarding marriage and cohabitation, divorce laws, and laws prohibiting polygamy.