Addison Wesley Longman, Inc. © 2000 Chapter 12 Gender, Race, and Ethnicity in the Labor Market

Addison Wesley Longman, Inc. © 2000

Figure 12.1 Mean Earnings as a Percentage of White Male Earnings, Various Demographic Groups, Full-Time Workers over 24 Years Old, 1999 Source: U.S. Bureau of the Census, Money Income in the United States, 1999, Series P-60, no. 209 (Washington, D.C.: U.S. Government Printing Office, 2000), Table 10.

Addison Wesley Longman, Inc. © 2000

MINORITIES? What do we mean by minority? White men as a percentage of work force – % – % – % (expected) Important Issue –Fairness, Justice –62% of our workforce –Discrimination affects incentives, productivity, business profits and economic output

Addison Wesley Longman, Inc. © 2000 Equilibrium Employment of Women or Minorities in Firms That Discriminate Figure 12.2

Addison Wesley Longman, Inc. © 2000 Market Demand for Women or Minorities as a Function of Relative Wages Figure 12.3

Addison Wesley Longman, Inc. © 2000 Effects on Relative Wages of an Increased Number of Nondiscriminatory Employers Figure 12.4

Addison Wesley Longman, Inc. © 2000 Effects on Relative Wages of a Decline in the Discriminatory Preferences of Employers Figure 12.5

Addison Wesley Longman, Inc. © 2000 OTHER ECONOMIC FORCES Is discrimination only measured by equal pay for equal work? What if members of some group are kept out of certain occupations or industries? –If the industries are higher paid, then this is a form of discrimination –Even if the remaining positions are desirable, there are economic effects that could depress wages

Addison Wesley Longman, Inc. © 2000 Labor Market “Crowding”Figure 12.7

Addison Wesley Longman, Inc. © 2000 The Market for Computer Science and English ProfessorsExample 12.3

Addison Wesley Longman, Inc. © 2000 Gender What might explain wage gap? –Age – Table In younger cohort, women earn 74 cents on the dollar with a BA –women work fewer hours –career interruptions; among 30 year old women, those with children earn 23% less. Those without earn 10% less than 30 year old men. –family needs Women are over-represented in low paying occupations (explains 8-10%) –Cashiers vs. truck drivers –teachers, nurses vs. other college educated professions Controlling for all these factors, women earn 88%

Addison Wesley Longman, Inc. © 2000 Is it Discrimination? 12% stills remains unexplained by economic variables –suggests discrimination, but not as large as original numbers suggest Wage Discrimination is about 10% - this refers to discrimination of equally productive individuals in the same position. Occupational Discrimination - when a group is blocked from certain position overtly or by societal, cultural choices. This explains some (not all) of the remaining differences

Addison Wesley Longman, Inc. © 2000 Global Comparisons Women’s productivity is closer to men’s here than anywhere in the world US women are less occupationally segregated But, in Europe - the gender wage gap is smaller Explanations include –less discrimination –there is a lower wage gap across professions. Gap between teachers pay and executives pay is smaller.

Addison Wesley Longman, Inc. © 2000 Estimated Male “Comparable Worth” Salary EquationFigure 12A.1

Addison Wesley Longman, Inc. © 2000 Using the Estimated Male “Comparable Worth” Salary Equation to Estimate the Extent of Underpayment in Female Jobs Figure 12A.2

Addison Wesley Longman, Inc. © 2000 RACIAL DISCRIMINATION Statistics show African American men earn 68% of white men. Women earn 55% In addition, unemployment rates are double(or more) across all levels of age, education, experience Studies show this rate stays about double regardless of the economy. Thus, recessions affect minorities more severely. Occupational Discrimination - only about half as important a factor as it is in gender discrimination Wage Discrimination - control for economic factors and wages are 89%

Addison Wesley Longman, Inc. © 2000 Racial Discrimination How do we measure discrimination? –11% of wage gap unexplained by economics –of the part that is explainable, is some of that still discrimination (such as education etc.) How do other groups fare? Table 12.6 controls for economic factors and compares wages. Men of Mexican, Chinese or Native American origin fare worse than their economic variables suggest. Japanese and European Americans are paid more on average than their education, experience etc. suggest.

Addison Wesley Longman, Inc. © 2000

Why Does Discrimination Exist? Some employers are simply prejudiced –should earn lower profits –how can this persist? Customer Discrimination Employee Discrimination Statistical Discrimination - apply characteristics of a group to an individual (Jane vs. John)

Addison Wesley Longman, Inc. © 2000 Solutions Equal Pay Act (1963) –outlawed protective laws (women can’t work in a job they may have to lift something) –outlawed separate pay scales Title VII of Civil Rights Act - extended laws to hiring and firing –disparate treatment –disparate impact - policies may appear neutral but are not. For example, must advertise a position to provide equal access. Comparable Worth

Addison Wesley Longman, Inc. © 2000 Effectiveness of Programs Increased educational attainment accounts for % of the increased earnings of black men. School quality improvements accounts for 15-20% of the improvement More lower income African Americans are dropping out of the labor force giving the appearance of an improved wage average. Studies conclude that Federal anti-discrimination programs account for a large portion of the progress. Largest gains made from when these programs were initiated.