Chapter 1 An Introduction Different economic outcomes Using economics to explain differences Different economic outcomes Using economics to explain differences

Men vs. Women differences in work history labor force participation differences in earnings gender wage gap differences in occupations occupational segregation differences in work history labor force participation differences in earnings gender wage gap differences in occupations occupational segregation

differences in education years of schooling type of skills differences in the household household role impact of marriage impact of divorce working & power in the household differences in education years of schooling type of skills differences in the household household role impact of marriage impact of divorce working & power in the household

Changes for Women,

Changes for Men,

in this course we examine data that documents these differences and these changes how does economic theory explain this? how do policies explain and affect this? we examine data that documents these differences and these changes how does economic theory explain this? how do policies explain and affect this?

Policies do affect men and women differently welfare reform no fault divorce child care & family leave Social Security income tax code welfare reform no fault divorce child care & family leave Social Security income tax code

Why focus on women? largest changes over time traditional models not always geared towards women more variation among women largest changes over time traditional models not always geared towards women more variation among women

Using economics Microeconomics studies choices individuals households firms government Microeconomics studies choices individuals households firms government

Why choose? scarcity: resources are limited, wants are unlimited choices are necessary because resources are scarce scarcity: resources are limited, wants are unlimited choices are necessary because resources are scarce

choose one alternative, give up another lose out on benefits of next best alternative (opportunity cost) choose one alternative, give up another lose out on benefits of next best alternative (opportunity cost)

exampleexample NYS budget limited amount of raise-able revenue many choices -- education, prisons, health care... NYS budget limited amount of raise-able revenue many choices -- education, prisons, health care...

If we spend $200 million for capital improvements on SUNY campuses: lose out on next best use of $200 million next best use? If we spend $200 million for capital improvements on SUNY campuses: lose out on next best use of $200 million next best use?

example relating to gender economics time is the ultimate scarce resource dividing time between paid work childcare chores/errands leisure time is the ultimate scarce resource dividing time between paid work childcare chores/errands leisure

men and women make different choices here but any choice on use of time has an opportunity cost if work overtime… lose out on time w/ kids if stay home w/ kids…. lose out on potential wages/benefits men and women make different choices here but any choice on use of time has an opportunity cost if work overtime… lose out on time w/ kids if stay home w/ kids…. lose out on potential wages/benefits

scarcity means choices, and choices mean costs

How to choose? we assume that people are rational: choose to maximize well-being rational choices use all available information weigh benefits and costs of options over time are consistent show foresight we assume that people are rational: choose to maximize well-being rational choices use all available information weigh benefits and costs of options over time are consistent show foresight

example: deciding to go to college rational decision compare costs: tuition, fees, books, value of time to the benefits: fun, value of learning, higher future income, higher life satisfaction costs are immediate, benefits are long term rational decision compare costs: tuition, fees, books, value of time to the benefits: fun, value of learning, higher future income, higher life satisfaction costs are immediate, benefits are long term

Statements about outcomes positive vs. normative statements positive statements statements of fact verified as true or false “Students who attend class earn higher grades on average” positive vs. normative statements positive statements statements of fact verified as true or false “Students who attend class earn higher grades on average”

normative statements value judgements not testable “Students should attend class.” normative statements value judgements not testable “Students should attend class.”

examplesexamples “Over 60% of women with children under 6 work” positive “Women should get paid maternity leave” normative “Over 60% of women with children under 6 work” positive “Women should get paid maternity leave” normative

more examples using economic theory to explain gender earnings gap positive arguing for laws or policy to eliminate gap normative using economic theory to explain gender earnings gap positive arguing for laws or policy to eliminate gap normative

Is an outcome good or bad? depends on criteria for judging Efficient outcome agents allowed to max well-being? does it use scarce resources to produce output that society values the most? depends on criteria for judging Efficient outcome agents allowed to max well-being? does it use scarce resources to produce output that society values the most?

efficient outcome may not be equitable or “fair” moral judging an outcome as good or bad depends on criteria efficient outcome may not be equitable or “fair” moral judging an outcome as good or bad depends on criteria

criticisms of economics is behavior rational? is efficiency the best criteria for judging an outcome? do men and women differ in decision making, or in how they judge outcomes? is behavior rational? is efficiency the best criteria for judging an outcome? do men and women differ in decision making, or in how they judge outcomes?