1. What is discrimination? Consider the case of a taxi driver who is driving down a street at night in a dangerous part of town and is hailed simultaneously by people on each side of the street. It is equally easy for him to pick up either customer. On the left side of the street is a little old lady. On the right side is a tall African-American teenage boy wearing a hood. The taxi driver unhesitatingly chooses the little old lady over the teenager. Did he discriminate? Is he prejudiced? “Some cabdrivers and taxi industry representatives assert that cab drivers bypassing blacks is not prejudice, but largely a precautionary response to cab driver concerns about being robbed. But black Americans know from bitter experience that it happens all too often to all sorts of African Americans and Hispanic Americans---males and females, young and old, those dressed casually and those dressed in business and even evening wear---who clearly have nothing more in mind than using a taxi to get where they're going. They know that all too often it's not the cab driver's fear of being robbed, it's the cab driver's prejudice that's responsible.” —Hugh B. Price, President, National Urban League

2. Discrimination: Treating people differently on the basis of their membership in a class – Discrimination need not imply racism, sexism, or prejudice. Prejudice: dislike, distaste, or misperception based on innate characteristics such as race or sex – Prejudice can but need not generate discrimination.

3. Employer decisions that treat identical workers or applicants differently because of characteristics unrelated to their individual productivity. What is labor market discrimination? Panera’s Bread: “If you pay attention to the girls waiting on you at the registers, though, you might notice some trends: first, they’re all girls between the ages of 16 and 24. Second, with rare exception, they’re all white.” —Anna Walsh, “Panera Bread’s racist, sexist practices warrant boycott,” The Tartan, 12/5/2011

4. Wage discrimination: paying women with identical qualifications less. Occupational discrimination: shunting women into particular occupations. “[W]hen I got out of college, they still had ads that were segregated by sex—jobs would say… Jobs Male… Jobs Female… And there was still an incredible amount of sexism in the journalism world when I got out. There were very few women. I was one of the first women in the sort of wave of women who went into journalism in the seventies. And I was part of a sex discrimination suit against the place that I worked at in New Haven because we discovered that the women and the men had pretty much the same education and experience and we were making like a third less.” Trish Hall, Op-Ed editor of The New York Times.

5. Sample from 1980 Census, when Trish would have been roughly 30 years old. Sample Selection Criteria: Measuring Labor Market Discrimination Empirical Challenge—how can we separate wage differences due to discrimination from those due to differences in productivity created by different levels of training, education and experience, i.e., human capital?

6. Male SampleFemale Sample Wage 9.526.92 lnWage 2.161.84 Education 15.6215.31 Age 38.7137.03 Sample Size (N) 1658 761 Table 1. Means of Dependent & Explanatory Variables Female journalists earned, on average, 72.7 cents per hour for every dollar earned by male journalists. Their hourly wage was 27.3 % less than male journalists, on average. Less than a third of women were journalists

7. Button from 1970 worn by people protesting pay disparity between women and men

9. Female journalists earned, on average, 31.4% less than male journalists, on average. But, perhaps, it is because male journalists have more experience or education than female journalists

10. Interpretation: The wages of female journalists in 1980 were 28.3% lower than their male colleagues, on average, holding age and education constant. Method is called “Decomposition of wage differentials” What portion of the wage gap is due to human capital factors, i.e., to differences in productivity? The portion of the wage gap not explained by these differences is attributed to discrimination.

11. Limitations of the wage gap of 28.3% as evidence of discrimination. 1.Not directly linked to discriminatory behavior—it is an unexplained difference between males and females. It may be biased due to omitted variables.

12. Wood, Corcoran and Courant (1993) Sample of Michigan Law School Grads of 1972-75. Advantages Disadvantage: Three measures of academic performance Grade Point Average (GPA) Dummy variable for whether they participated in moot court. Dummy variable for whether they were are the staff of the law review. Sample is not representative of the general population

13. FemaleMale Hours22802510 Wage (1989$)37.1455.21 Months—Part-time for kids10.070.12 Gov. Lawyer.136.047 Big Firm Lawyer.123.273 Sample Means Fifteen Years After Graduation

14. Explanatory Variables None– 0.485 Hours, exp, ed– 0.170 Hours, exp, ed, job-type– 0.124

15. Women Litigation Trusts 25% 100%

16. 240 180 8 16 Earnings (thou. of $ per year) Unplanned Absences (days per year) C—Charles M—Michelle

17. 240 180 8 16 Earnings (thou. of $ per year) Unplanned Absences (days per year) 2 1 A

18. ΔE M ΔE C ΔA = –1 Earnings (thou. of $ per year) Unplanned Absences (days per year) A

19. 240 180 8 16 Earnings (thou. of $ per year) Unplanned Absences (days per year) 2 1

20. Limitations of the wage gap of 28.3% as evidence of discrimination. 2. Assumes that Education and Experience are not affected by discrimination. (Story about female funeral directors struggles to find apprenticeships.) “The observed productive characteristic that contributes most of the wage gap between women and men in the same occupation is labor market experience” (Ehrenberg & Smith, p. 404) 3. Assumes that the return to education and experience is the same for both groups. Story about the black cotton-picker.

21. Women Men Question: why were women journalists getting a lower return from experience and a higher one from education?

22. Lets Ignore Ed temporarily It must be true that: Taking the diff:

23. where Often called… “unjustified discrimination”

24. Women Men 3. Assumes that the return to education and experience is the same for both groups. Story about the black cotton-picker. Question: why were women journalists getting a lower return from experience and a higher one from education?

25. Focus on the relationship between wages and experience: Women Men

26. Male wage equation Female wage equation A B C

27. Distance AB BC Part of wage gap due to differences in human capital Part of wage gap due to “unjustified discrimination”

28. Distance AB BC Part of wage gap due to differences in human capital Part of wage gap due to “unjustified discrimination” Women Men

29. Male wage equation Female wage equation A B C 0.280 0.027

30. Interpretation of the Graph

31. Allowing the returns to experience and education to vary across the genders, women journalists in 1980 earned 30.7% less than men, on average, holding education constant. Part of the reason that the gap is so big is that women appear to have substituted education for experience. 8.8% of the gap ((.027/.307)*100) is due to the difference in the mean amount of experience and the rest 91.2% is due to their different returns to education—what some economists call unjustified discrimination. DifferenceRate of Return to Human Capital Unconditional Means72.7% Conditional Means71.7% Conditional Means72.0% Hence, we have produced three estimates of the wage gap between male and female journalists in 1980: (1) difference in sample means, i.e., unconditional means; (2) difference in conditional means, assuming that the rate of return to education and experience is the same for men and women; and (3) difference in conditional means allowing the rates of returns to differ across men and women.

32. Differences in labor market preferences across genders? Tastes for parenting Physical attributes Societal and parental expectations—How are these formed? – Past discrimination – Anticipated discrimination (Statistical discrimination becomes a self-fulfilling prophecy.)

33. Is the wage gap changing over time?

34. Sample from 2000 Census, when Trish would have been roughly 50 years old. Sample Selection Criteria:

35. Male SampleFemale Sample Wage 21.4317.54 lnWage 2.912.71 Education 15.6615.56 Age 41.9240.63 Sample Size (N) 1740 1330 Table 1. Means of Dependent & Explanatory Variables

38. Women Men

39. DifferenceRate of Return to Human Capital 19802000 Unconditional Means 72.7% Conditional Means 71.7% Conditional Means 72.0%

40. Source: U.S. Census Bureau, Historical Income Tables, Table P-38. Full- Time, Year-Round Workers by Median Earnings and Sex Median Annual Earnings of Full-Time Workers by Gender, 1960-2010 Earnings (thou. of 2010$) Male Female

41. Gender Earnings Gap for Full-Time, Full-Year Workers, 1960-2010 60.7 77.4 All Measures of the Gender Gap are Narrowing

42. Why is the gender earnings gap closing? Increases in labor market experience of women Increases in the education of women. Decreases in unionization Increases in the demand for intellectual skills relative to physical strength. Shifts of women into higher paying occupations Decreases in discrimination?