Backward- bending of Labor Supply Function and Free Riders

Discussion Papers


by YOSHINO Hisao

March 2012


It seems like that backward- bending of labor supply function can be observed in Central Asian Countries such as Uzbekistan and Kazakhstan. People’s basic needs of life are satisfied and they do not increase labor supplies even if wage increases. It is possible to find some cases in which slowdowns increase, when a manager in a firm enforces penalties for workers have slowdowns. This phenomenon occurs because a worker prefers the position of equilibrium on the labor supply function always in the upper direction. This article explains the increase of free-riders by penalties and how to avoid them.

Keywords: Backward- bending, Labor Supply Function, Free Riders, Central Asia
JEL classification: J20, J22, C70

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