Copyright © 2009 Pearson Education, Inc. Chapter 12 Gender, Race, and Ethnicity in the Labor...

Copyright © 2009 Pearson Education, Inc.

Chapter 12

Gender, Race, and Ethnicity in the Labor Market

Copyright © 2009 Pearson Education, Inc. 12- 2

Table 12.1: Shares of the Civilian Labor Force for Major Demographic Groups:

1984, 1994, 2004, 2014


Figure 12.1: Mean Earnings as a Percentage of White Male Earnings, Various

Demographic Groups, Full-Time Workers over 24 Years Old, 2005


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


Table 12.2: Female Earnings as a Percentage of Male Earnings, by Age and

Education, Full-Time Workers, 2005



Occupational Distribution

Women tend to be overrepresented in low-paying jobs and underrepresented in high-paying jobs


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



Hours and Experience

Within the same occupations, women work fewer hours and have less work experience than their Male counterparts



Factors That Can’t be Measured

Unobservable productivity characteristics

Discrimination in the labor market


Types Of Labor Market Discrimination

1. Wage Discrimination

2. Occupational Discrimination


Measuring Occupational Segregation

Does it reflect free choice, labor market discrimination, or pre-market discrimination?


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?


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


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


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


Table 12.4: Employment Ratios, Labor Force Participation Rates, and Unemployment Rates, by Race and Gender,* 1970-2005


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


Table 12.5: Male Earnings Differences, by Ancestry, 1990


Theories of Market Discrimination

Personal Prejudice - Employer, Employee, and Customer

Statistical Discrimination

Non Competitive Forces Models


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


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


Figure 12.2: Equilibrium Employment of Women or Minorities in

Firms that Discriminate


Figure 12.3: Market Demand for Women or Minorities as a Function of Relative Wages


Figure 12.4: Effects on Relative Wages of an Increased Number of

Nondiscriminatory Employers


Figure 12.5: Effects on Relative Wages of a Decline in the Discriminatory

Preferences of Employers


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.


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


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


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


Example 12.4: Comparable Worth and the University

The Market for Computer Science and English Professors


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)

Copyright © 2009 Pearson Education, Inc. Chapter 12 Gender, Race, and Ethnicity in the Labor...

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