The Effect of Minimum Wage on Women's Labor Supply

Despite the several researches that focus on investigating the minimum wage effect on the important economic variables، examining the effect of this variable on the labor supply and rate of labor’s participation in labor market has received less attention. The rate of women’s participation in Iran labor market has had a remarkable decrease in the recent years. On the other hand، real minimum wage rate has partially increased a little during the last 10 years. In this survey we investigate the participation behavior of Iranian urban and rural women’s labor in the framework of a Neoclassical Allocation Theory based on the individual utility maximization approach by means of panel data model and income-expenditure raw data of rural and urban families for the period 1385-1390. The results show that age، education and marriage have influenced participation of urban and rural women in labor market positively and labor income of urban and rural women has a negative effect on the rate of their participation in labor market. Moreover، family dimension variable doesn’t have a meaningful effect on the supply of urban and rural women labor. With respect to the relationship of participation behavior of women labor with of minimum wage، despite the positive impact of increasing the minimum wage on labor supply، marginal effect of minimum wage on urban labor participation of women differs from the respective effect on rural one – that this effect on urban labor participation of women is greater.