Chapter 9: The Economics of Education

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Transcript Chapter 9: The Economics of Education

Chapter 12: Gender, Race, and Ethnicity
Gender wage differences
• Full-time female workers have weekly earnings
that are approximately 75% of the weekly
earnings of full-time male workers.
Reasons for gender wage differences
educational attainment,
prior work experience,
average weekly hours of work,
occupational choice, and
• Discrimination exists if wage is related to factors
other than a worker’s productivity.
Occupational segregation
• index of dissimilarity - a measure of the
proportion of one group that would have to change
occupations to equalize the gender proportions in
Racial earnings differences
• black/white wage gap is larger than the gender
wage gap,
• this gap cannot be explained by differences in
occupational choice,
• very different patterns of employment, labor force
participation, and unemployment rates,
• differences in cognitive ability (as measured by
the AFQT) appear to explain much of the gap.
Ethnic differences in earnings
• primarily appears to be due to differences in
human capital and language proficiency.
Theories of discrimination
employer discrimination,
customer discrimination,
employee discrimination, and
statistical discrimination.
Noncompetitive models of
• crowding, and
• dual labor markets.
Search-related monopsony
• the existence of discriminatory employers raises
the expected cost of job search for members of
groups that are the targets of discrimination,
• this results in an upward sloping labor supply
curve for members of the affected group,
• leading to MFC > w and some degree of
monopsony power.
Legal restrictions
• Equal Pay Act of 1963 made it illegal to offer
different pay to men and women performing the
same tasks. (It did not, however, prohibit
discrimination in hiring or promotion.)
• Title VII of the Civil Rights Act of 1964 filled in
this gap by prohibiting discriminatory hiring
• disparate treatment
• disparate impact
Comparable worth
• jobs are assigned “points” according to a variety
of criteria,
• pay is based on the number of points.
Federal Contract Compliance
• created in 1965 to ensure that firms doing business
with the federal government engage in
nondiscriminatory employment behavior.
• firms doing business with the federal government
are required to maintain a mix of workers that is
proportionate to their representation in the relevant
labor market.