Download - Copyright © 2009 Pearson Education, Inc. Chapter 12 Gender, Race, and Ethnicity in the Labor Market
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Copyright © 2009 Pearson Education, Inc.
Chapter 12
Gender, Race, and Ethnicity in the Labor Market
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Table 12.1: Shares of the Civilian Labor Force for Major Demographic Groups:
1984, 1994, 2004, 2014
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Figure 12.1: Mean Earnings as a Percentage of White Male Earnings, Various
Demographic Groups, Full-Time Workers over 24 Years Old, 2005
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Why Do Women Earn Less Than Men?
Age and education account for some of the difference
Older women have less education than their male counterparts
Female/male earning ratios tend to fall with age
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Table 12.2: Female Earnings as a Percentage of Male Earnings, by Age and
Education, Full-Time Workers, 2005
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Why Do Women Earn Less Than Men?
Occupational Distribution
Women tend to be overrepresented in low-paying jobs and underrepresented in high-paying jobs
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Table 12.3: Female/Male Earnings Ratios and Percentages of Female Jobholders, Full-Time Wage and Salary Workers, by Selected High-
and Low-Paying Occupations, 2005
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Why Do Women Earn Less Than Men?
Hours and Experience
Within the same occupations, women work fewer hours and have less work experience than their Male counterparts
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Why Do Women Earn Less Than Men?
Factors That Can’t be Measured
Unobservable productivity characteristics
Discrimination in the labor market
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Types Of Labor Market Discrimination
1. Wage Discrimination
2. Occupational Discrimination
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Measuring Occupational Segregation
Does it reflect free choice, labor market discrimination, or pre-market discrimination?
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Measuring Wage Discrimination
How much women would earn if their productive characteristics were exactly the same as men?
How would the hypothetical earnings compare with the actual earnings of men?
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The Oaxaca Decomposition
Assume that:
1. Only one variable, education affects earnings. 2. The male earnings function is Wm = Am + BmSm3. The female earning function is Wf = Af + BfSf
where:
Wm = male earnings, Wf = female earningsAm and Af are intercepts (constants)Bm and Bf are coefficients that tell how earnings increase withone more year of schooling
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Measuring the Impact of Discrimination on the Wage
Dollars
Men’s Earnings Function
Women’s Earnings Function
Schooling sF s
M
wM
wF
M
wF
F
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Earning Differentials Between Black And White Americans
Black men have lower LFPRs and higher unemployment rates than white men
Black workers are more likely than white workers to be laid off in a recession
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Table 12.4: Employment Ratios, Labor Force Participation Rates, and Unemployment Rates, by Race and Gender,* 1970-2005
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Earning Differentials By Ethnicity
Earnings and Educational Attainment Vary Widely Across Ethnic Groups
Language Proficiency Is an Important Variable in Explaining the Wage Gap
Between Hispanics and Non Hispanics
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Table 12.5: Male Earnings Differences, by Ancestry, 1990
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Theories of Market Discrimination
Personal Prejudice - Employer, Employee, and Customer
Statistical Discrimination
Non Competitive Forces Models
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Personal Prejudice Models
1. Biased Employer – Acts as if Wf = Wf +d
2. Biased Employee – Acts as if Wm = Wm -d
3. Biased Customer – Acts as if P = P +d
Where d is the Discrimination Variable
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Personal Prejudice Model - Employer
Assume: 1. MRPm = MRPf 2. A competitive labor market 3. Wm>Wf
Under these conditions, a nonbiased employer will hire females up to the point where Wf = MRPf
The biased employer will hire females up to the point where Wf + d = MRPf, and d is a measure of discrimination
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Figure 12.2: Equilibrium Employment of Women or Minorities in
Firms that Discriminate
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Figure 12.3: Market Demand for Women or Minorities as a Function of Relative Wages
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Figure 12.4: Effects on Relative Wages of an Increased Number of
Nondiscriminatory Employers
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Figure 12.5: Effects on Relative Wages of a Decline in the Discriminatory
Preferences of Employers
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Personal Prejudice Model - Customer
If customers prefer to be served by white males:
1. Occupational segregation and discrimination may occur, or women will have to accept
lower pay or be better qualified than men to work in those jobs.
2. Firms that cater to prejudiced customers will pay higher wages and charge higher prices.
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Personal Prejudice Model - Employee
If white male employees are discriminatory:
1. Non discriminating firms will have to pay them a compensating differential, or,
2. Segregate the workplace or segregate by title
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Statistical Discrimination
An employer may unknowingly discriminate if he uses group characteristics to screen job applicants
Even if the use of group characteristics leads to correct hiring decisions on average, it will
discriminate against members of the group who are atypical
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Federal Programs to End Discrimination
Equal Wage Act of 1963 - What it didn’t do.
Title 7 of the Civil Rights Act of 1964 - What it remedied.
Disparate Treatment Disparate Impact Comparable Worth
Federal Contract Compliance Program and Affirmative Action
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Example 12.4: Comparable Worth and the University
The Market for Computer Science and English Professors
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Table 12.6: Change in the Racial Composition of a 1,600-Person Job Group with
Nondiscriminatory Hiring from a Pool That Is 12% Black (20% yearly turnover rate)