lecture21_Nov14

lecture21_Nov14 - Discrimination: Basic Issues and Theories...

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Discrimination:  Basic Issues and Theories
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Mean Earnings as a Percentage  of White Male Earnings, Various Demographic  Groups, Full Time Workers over 24 Years Old, 2003
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3 Theories of Labor Market Discrimination § Personal prejudice: Employer and Customer § Statistical Discrimination § Self-confirming expectations
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Neoclassical Theory of Labor Demand § Firm takes wage as given, chooses # of workers to  hire, based on: § 1) How much workers can produce with given technology § 2) Price of the product § In short-run equilibrium, hire workers up to point  where wage = marginal revenue product (MRP) § MRP = extra revenue generated from an extra hour of  labor § As wage › , # of workers hired fl
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Profit-Maximizing Hiring Decision Wage
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Personal Prejudice: Employer Discrimination § Assume workers have same level of productivity  (MRPW = MRPM) § No prejudice against male workers: § Firm hires where WM = MRP § Prejudice against female workers, so the employer acts  as if females are less productive. § Discriminatory employer only hires women at:
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This note was uploaded on 02/03/2012 for the course ECON 375 taught by Professor Staff during the Fall '10 term at Maryland.

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lecture21_Nov14 - Discrimination: Basic Issues and Theories...

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