Discrimination and wage level.

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Suppose male wages are determined by the earnings function WM = 25 + 0.40EM and female wages are determined by the earnings function WF = 15 + 0.20EF. If women have 10 years of experience and men have 20, what is the gender wage gap? How much can be attributed to human capital differences and how much is unexplained, and therefore attributed to discrimination? Show this scenario on a graph of both the male and female earnings functions

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Chapter 19, Problem 9PA

To determine

Discrimination and wage level.

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