addison wesley longman, inc. © 2000 chapter 12 gender, race, and ethnicity in the labor market

Addison Wesley Longman, Inc. © 2000

Chapter 12

Gender, Race, and Ethnicity in the Labor Market


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.


MINORITIES?• What do we mean by minority?• White men as a percentage of work force

– 1976 - 53%– 1996 - 41%– 2006 - 38% (expected)

• Important Issue– Fairness, Justice– 62% of our workforce– Discrimination affects incentives, productivity,

business profits and economic output


Equilibrium Employment of Women or Minorities in Firms That Discriminate

Figure 12.2


Market Demand for Women or Minorities as a Function of Relative Wages

Figure 12.3


Effects on Relative Wages of an Increased Number of Nondiscriminatory Employers

Figure 12.4


Effects on Relative Wages of a Decline in the Discriminatory Preferences of Employers

Figure 12.5


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


Labor Market “Crowding”Figure 12.7


The Market for Computer Science and English ProfessorsExample 12.3


Gender• What might explain wage gap?

– Age – Table 12.2 - 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%


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


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.


Estimated Male “Comparable Worth” Salary EquationFigure 12A.1


Using the Estimated Male “Comparable Worth” Salary Equation to Estimate the Extent of Underpayment in Female Jobs

Figure 12A.2


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%


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.


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)


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


Effectiveness of Programs

• Increased educational attainment accounts for 20-25% 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 1960-1975 when these programs were initiated.

addison wesley longman, inc. © 2000 chapter 12 gender, race, and ethnicity in the labor market

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