Chap013.4 - z Assume ² Male and female employees are...

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4 Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 19 ± Compensating Wage Differential z The differences in the wage rate -- positive or negative -- that reflects the attractiveness of a job’s working conditions z Examples ² Job safety o Police and fire-fighters ² Schedules o Day vs. night o Teachers Explaining Differences in Earnings Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 20 ± Discrimination in the Labor Market z Competitive labor theory predicts that wage differentials not based on differences in VMP will be eliminated. z However, women and minorities continue to receive lower wages that white males with similar measures of human capital. Explaining Differences in Earnings Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 21 ± Discrimination by Employers z An arbitrary preference by an employer for one group of workers over another Explaining Differences in Earnings Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 22 ± Discrimination by Employers
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Unformatted text preview: z Assume ² Male and female employees are equally productive. ² An employer prefers to hire male employees. ² Male employees are paid more. Explaining Differences in Earnings Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 23 ± Discrimination by Employers z Then: ² The discriminating firm’s profit will be less. ² Firms employing females will be more profitable. ² The demand for females will increase and female wage rates will rise until it equals the wage for males and the VMP. ² To discriminate, the employers would pay males a wage that is greater than their VMP and reduce their profit. Explaining Differences in Earnings Chapter 13: Labor Markets, Poverty, and Income Distribution Slide 24 ± Discrimination by Others z Customer Discrimination ² The willingness of consumers to pay more for a product produced by members of a favored group, even if the quality of the product is unaffected. Explaining Differences in Earnings...
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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