McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 28 Gender

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Outline ECONOMIC STATUS OF WOMEN WHAT IS DISCRIMINATION WHY WOMEN MAKE LESS THAN MEN MODELING SEX DISCRIMINATION

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. What is Discrimination Disparate Treatment Discrimination treating two otherwise equal people differently on the basis of gender Adverse Impact Discrimination doing something that is not necessarily discriminatory on its face but that impacts some groups more negatively than others Rational or Statistical Discrimination discrimination that is based on sound statistical evidence and is consistent with profit maximization

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Measuring and Detecting Discrimination Regression techniques –Statistical methods which seek to determine if the differences in treatment for men and women could have happened by random chance. Auditing techniques –Sending paid actors into a situation to determine if people with identical economic characteristics are treated differently based on gender.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Economic Status of Women Labor-force participation rate –Labor force participation rate: the percentage of people in a particular category who are over 16 and working –After adjusting the labor-force participation rate to reflect the fact that as the U.S. population has been ageing the real impact is Men –have 75% more income than women, –make 28% more in wages for full-time employment, –are 8% (3.5 percentage points) more likely to be covered by pensions, –are less likely to be in poverty. Bankruptcies of single women are increasing substantially.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Ratio of Women’s Income to Men’s

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Why Women Make Less than Men Pregnancy –Loss of time in the field and intermittent absence can put women at a economic disadvantage. (Many times this difference in treatment is against the law.) Stay-at-home Moms –98% of stay-at-home parents are women leaving them out of the job market for extended periods of time.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Time out of the labor market causes women to lose the period of rapid economic advancement. Age-Earnings Profile

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Why Women Make Less than Men (continued) Different Professions –Teachers (82%) –Nurses (91%) –Social Workers (70%) –Day Care workers (97%) –Secretaries (99%) –Vs –Mechanics(5%), Construction Workers (2%), Truck Drivers(4%)

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Flexible Employment –Women, more than men, tend to choose jobs that allow them to deal with her children’s activities and illnesses. Why Women Make Less than Men (continued)

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Sociology vs. Economics Economic Explanation for pay differences –People make choices and one of the consequences of those choices is their earning capacity. –If women choose professions that do not pay well, to have and stay home with children jobs that allow them to deal with their children –they will make less money.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Sociology vs. Economics (continued) Sociological Explanation for pay differences –Women are socialized to pick certain professions into being the parent to stay home into being the parent that sacrifices career for family –which causes them to be paid less.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Why Competition Would Eliminate Discriminatory Pay Businesses that hired only men at the higher wage would have higher costs than businesses that did not discriminate. Businesses that did not discriminate could lower their prices and take the market share of those firms that did discriminate. As this happened firms would see that discrimination was not consistent with maximizing profits and would stop discriminating.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Why Competition Would Not Necessarily Eliminate Discrimination In industries where there is economic profit, firm owners may continue to discriminate and consider it a price they are willing to pay so as to not employ women. In industries in which the customer chooses which business to patronize based on gender, firms may be willing to discriminate because their profit maximizing interest and discrimination are consistent.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Consumption Market Discrimination Women pay more for automobiles. Many women argue that they pay more for dry cleaning (evidence is ambiguous.) Women pay less for automobile insurance and pay more for retirement annuities because they generally are safer drivers and live longer.

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Kick it Up a Notch: Modeling Sex Discrimination Labor market for jobs only men are allowed do. Wage S ND D w ND Labor market for jobs that women who work must do. Wage S ND D SDSD SDSD w men w women