1. Copyright © 2009 Pearson Education, Inc. 12- 1 Topic 7 (Chapter 12) Gender and Race in Pay

2. Copyright © 2009 Pearson Education, Inc. 12- 2 Table 12.1: Shares of the Civilian Labor Force for Major Demographic Groups: 1984, 1994, 2004, 2014

3. Copyright © 2009 Pearson Education, Inc. 12- 3 Figure 12.1: Mean Earnings as a Percentage of White Male Earnings, Various Demographic Groups, Full-Time Workers over 24 Years Old, 2005

4. Copyright © 2009 Pearson Education, Inc. 12- 4 Table 12.2: Female Earnings as a Percentage of Male Earnings, by Age and Education, Full-Time Workers, 2005

5. Copyright © 2009 Pearson Education, Inc. 12- 5 Table 12.3: Female/Male Earnings Ratios and Percentages of Female Jobholders, Full-Time Wage and Salary Workers, by Selected High- and Low-Paying Occupations, 2005

6. Copyright © 2009 Pearson Education, Inc. 12- 6 Table 12.4: Employment Ratios, Labor Force Participation Rates, and Unemployment Rates, by Race and Gender,* 1970-2005

7. Copyright © 2009 Pearson Education, Inc. 12- 7 Table 12.5: Male Earnings Differences, by Ancestry, 1990

8. Copyright © 2009 Pearson Education, Inc. 12- 8 Measured and unmeasured sources of earnings differences  Measured sources -Education -Experience -Working hours -Occupation  Unmeasured sources -Other characteristics (Quality, Language proficiency) -Social role (fat, ugly, bald, short) -Discrimination

9. Copyright © 2009 Pearson Education, Inc. 12- 9 Theories of discrimination  Discrimination by employer, employees, and customer.  Employer discrimination: -MRP=W m -W f =W m -d => MRP=W f +d -Or d’=(W m /W f )-1 - Firm cannot maximize profits -Maximizing utility, U=U(taste, profit)? -Discrimination is greater if the minority group is a larger fraction of population

10. Copyright © 2009 Pearson Education, Inc. 12- 10 Figure 12.2: Equilibrium Employment of Women or Minorities in Firms that Discriminate

11. Copyright © 2009 Pearson Education, Inc. 12- 11 Figure 12.3: Market Demand for Women or Minorities as a Function of Relative Wages

12. Copyright © 2009 Pearson Education, Inc. 12- 12 Figure 12.4: Effects on Relative Wages of an Increased Number of Nondiscriminatory Employers

13. Copyright © 2009 Pearson Education, Inc. 12- 13 Figure 12.5: Effects on Relative Wages of a Decline in the Discriminatory Preferences of Employers

14. Copyright © 2009 Pearson Education, Inc. 12- 14 Discrimination by employees and customers  Employees have discriminatory preferences  costly to employers, but so is getting rid of it.  Customer discrimination. cf) Statistical discrimination: part of screening problem. i) Employers use a group performance as a screening device. ii) Employers have more difficulty in finding the productivity of minority.

15. Copyright © 2009 Pearson Education, Inc. 12- 15 Figure 12.6: The Screening Problem

16. Copyright © 2009 Pearson Education, Inc. 12- 16 Figure 12.7: Labor Market Crowding

17. Copyright © 2009 Pearson Education, Inc. 12- 17 Government programs to end discrimination  Equal Pay Act of 1963: outlaw separate pay scales for women and men (no mentioning equal opportunity)  Affirmative Action Plan of 1965: Equal employment opportunity plus required federal contractors to file action plans showing how they intended to increase employment of minorities.

18. Copyright © 2009 Pearson Education, Inc. 12- 18 Table 12.6: Change in the Racial Composition of a 1,600-Person Job Group with Nondiscriminatory Hiring from a Pool That Is 12% Black (20% yearly turnover rate)

19. Copyright © 2009 Pearson Education, Inc. 12- 19 Figure 12A.1: Estimated Male Comparable-Worth Salary Equation

20. Copyright © 2009 Pearson Education, Inc. 12- 20 Figure 12A.2: Using the Estimated Male Comparable-Worth Salary Equation to Estimate the Extent of Underpayment in Female Jobs