Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given by: Wm= 500 + 100s and W₁ = 300 + 75s On average, men have 14 years of schooling and women have 12 years of schooling What is the male-female wage differential in the labor market?
Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given by: Wm= 500 + 100s and W₁ = 300 + 75s On average, men have 14 years of schooling and women have 12 years of schooling What is the male-female wage differential in the labor market?
Chapter30: The Labor Market
Section: Chapter Questions
Problem 11E
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23. Economics: Labor Economics
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Transcribed Image Text:Suppose years of schooling, s, is the only variable that affects earnings. The
equations for the weekly salaries of male and female workers are given by:
Wm= 500 + 100s
and
W₁ = 300 + 75s
On average, men have 14 years of schooling and women have 12 years of schooling
What is the male-female wage differential in the labor market?
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Transcribed Image Text:and
W₁ = 300 + 75s
On average, men have 14 years of schooling and women have 12 years of schoolin
a) What is the male-female wage differential in the labor market?
b) Using the Oaxaca-Blinder decomposition, calculate how much of this wage
differential could be due to discrimination?
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