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Forward falling labour supply and monopsony equili



This paper demonstrates that labour supply curves can be forward falling just as they can be backward bending. Both types of supply curves are consistent with utility maximizing behavior. Both types of supply curve lead to the possibility of multiple equilibria. A monopsonist's global profit maximum always occurs in the positively sloping segment of a backward bending labour supply curve. But if the supply curve is forward falling, the global maximum is always in the negatively sloping segment. When applied to LDCs the presence of monopsony in a labour market with forward falling labour supply provides new insights into the behaviour of monopsony in a labour market with forward falling labour supply provides new insights into teh behavior of output following land reform.


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