Female labor participation in middle eastern nations is relatively low. If somet

Question

Female labor participation in middle eastern nations is relatively low. If something were to change such that female labor force participation rose to the levels it is in most developed nations, ceteris paribus, what will happen to the equilibrium wage rate and level of employment in the middle eastern labor markets?

The equilibrium wage would rise and the equilibrium level of employment would rise

The equilibrium wage would rise and the equilibrium level of employment would fall

The equilibrium wage would fall and the equilibrium level of employment would rise

The equilibrium wage would fall and the equilibrium level of employment would fall

The equilibrium wage would rise and the equilibrium level of employment would rise

The equilibrium wage would rise and the equilibrium level of employment would fall

The equilibrium wage would fall and the equilibrium level of employment would rise

The equilibrium wage would fall and the equilibrium level of employment would fall

Explanation / Answer

To alter the situation of lower female participation rate, more females need to find employment in the economy.An increase in female participation rate will result in an increase in total labour force prevailing in an economy.

Now, since the equilibrium wage rate is determined by the intersection of labor demand and labor supply, an increase in labor supply will result in a fall in the equilibrium wage rate as more of labor will be available in the economy at lower wage rates due to more females trying to find employment in the economy.

Also, since a higher laborforce essentially means higher employment with passage of time, it can be concluded that an increase in female laborforce participation result would result in 1) lower equilibrium wage, and 2) Higher equilibrium level of employment.

Hence, the correct answer is (c)

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