Econ 315: Discrimination

How has the education gap been between genders?

Women are now more likely to hold a college degree than men. -29.9% of men in 2014 had a bachelor's degree, while 30.2% of women did in 2014.

What are some emperical evidence on the stem gap between men and women?

-About 62% of stem graduates are men. -Engineering is 80% male. -About 70% of college degrees stem jobs are held by men. -Men are about 1.6 times as likely to pick stem majors. -Men are 46% more likely to finish stem majors vs. 37% for women. -46% of stem graduates take a stem job, while 32% of women take stem jobs.

What is evidence of the race gap?

-Blau and Kahn find that 89% of the pay gap can be explained by differences in productivity characteristics. -The pay gap, unfortunately, has not changed much over time. -While the education gaphas shrunk, the payoffs received with additional education have increased, which expands the gap.

What are some implications of statisticaly discrimination?

-Employers are not harmed when they practice statistical discrimination. They profit since they minimize hiring costs. -Employers are not being malicious in practicing this type of discrimination. Unfortunately, workers who have characteristics different than average are harmed. -Statistical discrimination decreases when the average characteristics of the groups converge over time.

How much is the gender gap?

-If you just compare average earnings of women to men, the gap is 81 cents. -If you compare the same job, same experience, and same educaion, the gap is 93 cents. -Occupation differences explain 33% of the gender gap. -Education explains -6% because more women are college educated. -The 7% (93 cents) is the real gap.

What are some controversies and disagreements over the pay gap?

-It's unclear whether the unexplained portion overstates or understates discrimination. -It's not clear whether the observed and unobserved characteristics favor men or women.

What are some reasons why pay is different?

-Pre-Entry Discrimination -Differences in Education -Differences in Training -Differences in Work Experience -Taste-Based Discrimination -Statistical Discrimination -Labor Market Segmentation -Bargaining Power -Compensating Differentials -Unobserved differences

What categories does discrimination fall into?

-Pre-Market Discrimination-Human capital discrimination often occurs before a person has entered the labor market. -Post-Market Discrimination-Any type of discrimination (wage, employment, and occupational) that occurs after a person has entered the labor market.

Why has the gender gap decreased overtime?

-Skills of women have increased. -Industrial distribution has shifted in favor of women. -Decline in unionism has decreased male wages. -Women earn less than men across all races. -The ratio of female to male hourly earnings rose substantially from the late 1970s to the early 1990s and has leveled off since. -Women have made significant gains in recent decades into higher paying occupations over the past few decades.

Have anti-discrimination policies worked?

-The empirical evidence on whether government policies have narrowed the gender and racial pay gaps is mixed. -Affirmative Action laws have appeared to improve the employment opportunities for women and minorities in the 1970s but this progress ended in the 1980s. -Evidence suggests that once the most blatant forms of discrimination were attacked, the effects of federal efforts have diminished. -It's hard to prove anything. It's a complicated issue with many interrelated factors. Discrimination plays a role in the labor market, but we don't know how big.

How is the Taste for Discrimination measured?

-The strength of an employer's prejudice against black workers is measured by the discrimination coefficient (d). It's the disutility that a discriminating employer pays when hiring minority workers. -For prejudiced employers, the cost of hiring a black worker is the worker's wage (WB) plus the disutility coefficient (d). -Prejudiced employers are indifferent between white and black workers when: Ww=WB+d. -An employer will hire black workers when the white-black wage gap in the market is greater than 'd'. -If the wage gap is $2, but the disutility of black workers is $1, the firm will hire black workers.

Who are winners and the losers in the Taste for Discrimination Model?

-White workers (preferred group) are the winners because there is less competition in labor market and increased demand (more hired). -Black workers (unpreferred group) are the losers because they receive lower wages if they are hired and there's decreased demand. -Employers that discriminate are also loser because of the higher wage costs compared to non-discriminatory firms and they miss out on qualified workers.

What is Gary Becker's "Taste for Discrimination" Model?

Assumes discrimination is a preference for which a discriminator is willing to pay (higher prices or lower profits). -Society's taste for discrimination implies that its willing to forego output and profits as the "price" of discrimination. -Tastes for discrimination arise from employers, customers, or co-workers. -If black & white workers are equally productivity, a non-discriminatory firm will randomly hire if wages are the same between both groups.

What are the Executive Orders in 1965 and 1968?

Attempted to eliminate discrimination by businesses holding government contracts. -Firms with more than $50,000 of government contracts must develop affirmative action programs. -Firms must develop a plan to hire more women and minorities if the firm has a smaller portion of these workers relative to the available labor force.

What is some evidence of the gender wage gap?

Economic researchers decompose the pay gap into 2 parts. -Explained differences in productivity characteristics. -Unexplained portion (potential discrimination). -Blau and Kahn find that 60% of the pay gap can be explained by differences in occupation, industry, experience. -Pay gap has been falling equally due to an increase in the relative productivity characteristics of women and a decrease in the unexplained portion of the gap.

What is statistical discrimination?

Exists when employers base hiring decisions upon the average characteristics of the group to which the employee belongs. -Young males pay higher car insurance rates since they have more accidents (on average). -Employers base decisions on imperfect predictors of productivity such as age, experience, and education. -Ex-Politicians don't allocate as many funds to Historically Black Colleges as predominantly-white universities. As a result, African-Americans, on average, go to lower quality schools than other races. -Ex-Women, on average, have higher turnover rates and are more likely to leave for elder or child care. Even when it comes time for a promotion, women are 30% more likely to turn it down.

What are the long-run estimates of discrimination?

In the long run, non-discriminatory firms should drive out discriminatory firms. However, customer discrimination can still persist in competitive markets if people are willing to pay for preferences.

What is comparable worth?

Jobs are "rated" according to several categories. Equal work deserves equal pay mentality. -Knowledge and Problem Solving Abilities -Level of Accountability -Physical Conditions of Work -Other Measurable Characteristics -Ex-A man who takes care of a machine should be paid the same as a woman who takes care of children. -It's usually not a good idea to artificially adjust wages. Instead, treat supply and demand issues that cause the problem.

What is human capital discrimination?

Occurs if minorities have less access to productivity-enhancing opportunities such as formal schooling or on-the-job training. -This type of discrimination focuses on access to human capital.

What is occupation discrimination?

Occurs when minorities are arbitrarily restricted from entering some occupations, even though they are just as productive as other workers. -Workers are restricted to certain careers or jobs in a firm or denied promotions.

How do women do achievement tests?

On achievement tests, women do just as well as men. -Women do better on verbal than men, while men do better on science/mechanical/electronic. -Gender gaps in highschool test scores explain big portions of gaps that show up later.

Would society still be the same without anti-discrimination laws?

Other factors may have contributed to the changing society. -People's attitude's were changing. -The culture was changing at the same time. -More people were going to school.

What is the Civil Rights Act of 1964?

Outlaws both wage discrimination and employment discrimination. -The 1964 Act applies to race, gender, color, religion, national origin and also applies to the following types of businesses: private employers, labor unions, governments.

Why this discrepancy?

White males are more likely to have a college education than African Americans, and universities now have more female students than male students. -The quality of education received by African Americans has generally been lower to that acquired by white workers.

What is the Equal Pay Act of 1963?

Requires that men and women doing the same job be paid the same. -It essentially outlaws wage discrimination. -Firms could avoid the law's requirements by conducting employment discrimination (not hiring females for higher-paying male jobs).

Could discrimination be the cause of occupation prefrences?

Some argue that women invest in less human capital because of discrimination. -Women stay out of the labor force because of the low pay. -If discrimination decreased, more women may decide to remain single or childless. -Sexual harassment may cause women to drop out of the labor force.

What are some nondiscriminatory factors of the wage gap?

Some economists argue that part of the gender wage gap is the result of rational choices made by women. -The human capital decision model was based one expected earnings and length of time in labor force. -Women tend to have interrupted work careers due to childbearing. -Due to their shorter work careers, it is rational for women to invest less in education and training. -Further, human capital may decrease while women are out of the labor force.

What are some controversies over government intervention in ending discrimination?

Some take an interventionist's view and believe the government should legislate because of multiple market failures. -Markets have failed to eliminate discrimination on their own. -Minorities have been discriminated against in the acquisition of human capital. -Current legislation against discrimination does not correct for the effects of past discrimination.

How has the wage gap between races changed?

The ratio of African American to white hourly earnings has not changed much over the past 3 decades. -African Americans have an unemployment rates that has been consistently twice as large as white Americans. -The employment rate difference between white males and females has decreased over time. -African Americans are 12% of the employed labor force, but tend to be overrepresented in lower paying occupations.

What does ending occupational crowding do for women?

This allows females to enter male occupations and would, on average, raise women's wage rates, but lower men's wage rates. -There would be a net gain to society as domestic output and efficiency would increase. -By crowding women into a narrow set of "female" occupations, men will receive higher wage rates and women will receive low wage rates of lower wage rates.

What are other nondiscriminatory factors of the wage gap?

Wage gap may be the result of compensating wage differentials. -Women may tend to prefer safe jobs, less effort intensive jobs, and shorter commute times. -Women are more likely to work part-time. Full-time women work fewer hours than full-time men.

When does discrimination exist?

When workers (usually female or minority) who have the same abilities, education, training, and experience as white male workers are given inferior treatment with respect to hiring, occupational access, promotion, wage rate or working conditions.