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Lecture6(1) - Discrimination I Lecture 6 Announcements...

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Discrimination I Lecture 6, February 14, 2012
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Announcements Friday, February 17: Term Paper Session Miscellaneous (e.g., Peer Scholar, Q&A, etc.) Term Paper: First draft due Friday March 2, 10:00am. 2.5 weeks… Reminder: I will be unavailable during reading week. And don’t forget to work on the problems. 1
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Outline for today Can wages legitimately vary by all subgroups in the population? Descriptive statistics: Men versus women in Canada Whites versus Blacks, and men versus women in the U.S. Theories of discrimination Becker’s model of employer discrimination: Based on employer prejudice Based on customer or employee prejudice Implications of Becker’s model Coexistence of discrimination and competition? Statistical Discrimination Supply side (occupational crowding) 2
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Wages Across Markets In explaining wage differences for different types of labour, we can use the conventional supply and demand framework. Even with its limitations, the model highlights the fact that wages are determined by BOTH supply and demand factors in the market for a given type of labour. A key implication of the competitive supply and demand model is that wages are equal to the Value of the Marginal Product of Labour, i.e., Differences in wage are therefore driven by differences in VMP. And people with the same VMP should be paid the same wage. 3 W = VMP
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High and Low Wage Occupations “Simple” explanation of wages across occupations: Cab Drivers Lawyers S 1 S 2 D 1 D 2 W 1 W 2 Wage Wage Employment Employment
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High and Low Wage “Groups” But is this appropriate?: Women Men S 1 S 2 D 1 D 2 W 1 W 2 Wage Wage Employment Employment
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Labour Market Outcomes across Groups It is certainly possible that the difference in wages between men and women can be explained entirely by supply and demand factors. But improbable We now move to the question of why different groups (or people with a particular group characteristic) may earn different wages or incomes. Our focus will be on male-female differentials, with some attention to racial wage differentials (especially the Black-White differential in the United States). Begin with some simple descriptive statistics: Male and female earnings in Canada Statistics Canada Male/Female and Black/White differentials in the United States From Altonji and Blank (1999) 6
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Median Annual Earnings: All Workers 7 Source : Statistics Canada, constant 2009 dollars $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 1975 1980 1985 1990 1995 2000 2005 2010 Women Men
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Median Annual Earnings: FYFT 8 Source : Statistics Canada, constant 2009 dollars $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 1975 1980 1985 1990 1995 2000 2005 2010 Women Men
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Female-Male Earnings Ratio 9 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1975 1980 1985 1990 1995 2000 2005 2010 FYFT All Source : Statistics Canada
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Labour Market Outcomes by Race and Gender (U.S.) White Males Black Males White Females Black Females Share of all workers 0.405 0.037 0.378 0.049 Hourly wage 18.96 12.41 12.25 10.19 Annual earnings 36,169 23,645 20,522 17,624 Weeks worked 42.3 34.1 34.4 31.3 Share part-time 0.123 0.153 0.330 0.254 Share public sector 0.120 0.157 0.165 0.254 Unemployment rate 0.043 0.103 0.028 0.059
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