If the only working member of a household receives an increase in her wage rate,then

Question

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The effect of a wage rate increase on the working hours of the sole earner in a household is ambiguous without more information. The decision could be influenced by the income effect (where the worker may choose to work less because they can maintain the same standard of living with fewer hours) or the substitution effect (where the worker may choose to work more because the opportunity cost of not working has increased). Therefore, any of the outcomes—increasing, decreasing, or maintaining current hours of work—is possible.

If the Only Working Member of a Household Receives an Increase