chapter 1 an introduction different economic outcomes using economics to explain differences...
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Chapter 1Chapter 1An IntroductionAn IntroductionChapter 1Chapter 1An IntroductionAn Introduction
• Different economic outcomes
• Using economics to explain differences
• Different economic outcomes
• Using economics to explain differences
Men vs. WomenMen vs. WomenMen vs. WomenMen 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, 1960-2000Changes for Women, 1960-2000Changes for Women, 1960-2000Changes for Women, 1960-2000
0
20
40
60
80
100
120
140
% wom enever
m arried, 20-24
% Singlem otherfam lies
births per1000
wom en, 15-44
% births tounm arried
wom en
% m arriedwom enworking
ratio ofwom ens
earnings tom ens
earnings
% B.A.degreesgoing towom en
1960
2000
Changes for Men, 1960-2000Changes for Men, 1960-2000Changes for Men, 1960-2000Changes for Men, 1960-2000
0
20
40
60
80
100
120
140
% m en everm arried, 20-
24
% Singlefather
fam lies
% m arriedm en
working
1960
2000
in this coursein this coursein this coursein 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 Policies do affect men and women differentlydifferentlyPolicies do affect men and women Policies do affect men and women differentlydifferently
• 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?Why focus on women?Why focus on women?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 economicsUsing economicsUsing economicsUsing economics
• Microeconomics studies choices• individuals• households• firms• government
• Microeconomics studies choices• individuals• households• firms• government
Why choose?Why choose?Why choose?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)
exampleexampleexampleexample
• 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 example relating to gender economicseconomicsexample relating to gender example relating to gender economicseconomics
• 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
How to choose?How to choose?How to choose?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 collegeexample: deciding to go to collegeexample: deciding to go to collegeexample: 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 outcomesStatements about outcomesStatements about outcomesStatements 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.”
examplesexamplesexamplesexamples
• “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 examplesmore examplesmore examplesmore 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?Is an outcome good or bad?Is an outcome good or bad?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 economicscriticisms of economicscriticisms of economicscriticisms 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?