STUDY GUIDE F/MICROECONOMICS
21st Edition
ISBN: 9781307066920
Author: McConnell
Publisher: MCG/CREATE
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Chapter 23, Problem 6RQ
To determine
The discrimination coefficient and the demand curve.
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Assume we are investigating gender differences in labor market outcomes and we are analyzing employee discrimination. When discussing employee discrimination, the typical assumption is that two groups of workers are perfect substitutes. Some research, however, suggests that worker productivity rises when the diversity of the workforce in a firm increases. This implies that the marginal productivity of male workers increases as more female workers are hired. If employee discrimination occurs against women, under what conditions will a gender-segregated workforce exist? Will a wage gap between men and women exist? Explain your answer.
Complete the following labor supply table for a firm hiring labor competitively: LO17.2
Show graphically the labor supply and marginal resource (labor) cost curves for this firm. Are the curves the same or different? If they are different, which one is higher?
Plot the labor demand data of review question 2 in Chapter 16 on the graph used in part a above. What are the equilibrium wage rate and level of employment?
Suppose the demand curve for union labor is given by the equation: L = 450 − 3W.Suppose the current wage is $20. Now suppose the union is successful in raising the wage of its members to $28. At the same time, it is able to shift the demand for labor out to: L = 510 − 3W.
Has the higher wage negotiated by the union reduced the employment opportunities of its members? If so, by how much?
c. Who has benefitted and who has lost as a result of this negotiation. Be specific and complete.
Chapter 23 Solutions
STUDY GUIDE F/MICROECONOMICS
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- Suppose the demand curve for union labor is given by the equation: L = 450 − 3W.Suppose the current wage is $20. Now suppose the union is successful in raising the wage of its members to $28. At the same time, it is able to shift the demand for labor out to: L = 510 − 3W. a. What was the original employment level? What is the new employment level? b. Has the higher wage negotiated by the union reduced the employment opportunities of its members? If so, by how much? c. Who has benefitted and who has lost as a result of this negotiation. Be specific and complete.arrow_forward14.ASsume the labor force is made up of 40% women and 60% men. If 40% of all manufacturing jobsare held by women and 90% of the highest-paying management and executive level jobs inManufatacturing are held by men, then, with respect to the manufacturing sector, it can be said that: multiple choiceO.a. there is no horizontal occupational segregation but there is vertical occupational segregation. O.b. there is both horizontal and vertical occupational segregation.O.c. there is no sex-based discrimination in entry-level By solving it for 'r' through hit and trial method, the required interest rate can be found.positions but there is sex-based discriminationin management level positions.O.d. there is no sex-based discrimination in management positions but there is sex-baseddiscrimination in executive level positions.arrow_forwardSuppose 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 functionsarrow_forward
- Suppose in a particular labor market, the demand for labor is given by the equation LD = 180 – 3W and that the labor supply in this market for native-born citizens is given by LN = 3W, while the supply curve of immigrants in this market is given by LI = 2W, where L represents the number of workers, W is the wage expressed in real terms. Finally, suppose the production function can be represented by ?=100√L a. Assuming immigration is entirely prohibited, what are the equilibrium wage and employment level in this market? b. What would be the equilibrium wage and employment level in this market if immigration were completed legalized? c. How many jobs do natives lose as a result of this immigration? How much aggregate income is lost? d. Assuming the costs of capital in this market are zero, find the total profits to firms before and after immigration. What is the change in total profits? e. Compute the total output of this market before and after immigration. How much total output does…arrow_forwardExplain why the Ellis Island paradigm of U.S. immigration history excludes and cannot account for Africans (the forcibly emigrated and enslaved) and Native Americans, Mexican Americans, Asians and other non-European immigrants..arrow_forwardSuppose that an additional year of schooling raised wages by 7 percent in 1970, regardless of the worker’s race or ethnicity. Suppose also that the wage differential between the average white and the average Hispanic was 36 percent. Finally, assume education is the only factor that affects productivity, and the average white worker had 12 years of schooling in 1970, while the average Hispanic worker had 9 years. By 1980, the average white worker had 13 years of education, while the average Hispanic worker had 11 years. A year of schooling still increased earnings by 7 percent, regardless of the worker’s ethnic background, and the wage differential between the average white worker and the average Hispanic worker fell to 24 percent. Was there a decrease in wage discrimination during the decade? Was there a decrease in the share of the wage differential between whites and Hispanics that can be attributed to discrimination?arrow_forward
- This question is in the context of the Becker model. Suppose Firm A and Firm B sell their output in the same output market, purchase inputs in the same input markets and use the same production technology. Suppose the owners of Firm A and Firm B hire only women, with the following inequality true:WF(1 + dA) < WMandWF(1 + dB) < WM.If the discrimination coefficient is higher for Firm A than Firm B (dA > dB), then which of the following statements is true?●Firm B will earn higher profits●Both firms will earn the same profits●Firm A will earn higher profits●Both firms will earn less profit than they would if they had d=0arrow_forwardHow do social scientists measure income segregation? Racial segregation? Explain how researchers explore the extent to which racial segregation is the product of income segregation. What are the major findings of this work? What factors other than income differences contribute to racial segregation? Discuss.arrow_forwardThese are people who have become poor. They possess skills, and they once moved upward with the rest of society. But now their jobs have been destroyed, and their skills have been rendered useless. In the process, they have been pushed down toward poverty from whence they came. This particular group is Negro, and the chances of ever breaking through, of returning to the old conditions, are very slim. Yet their plight is not exclusively racial, for it is shared by the semi-skilled and unskilled workers who are the victims of technological unemployment in the mass-production industries. They are involved in an interracial misery. These people are the rejects of the affluent society. They never had the right skills in the first place, or they lost them when the rest of the economy advanced. They are the ones who make up a huge portion of the culture of poverty in the cities of America. They are to be counted in the millions. ... there are new definitions of what man can achieve, of what…arrow_forward
- These are people who have become poor. They possess skills, and they once moved upward with the rest of society. But now their jobs have been destroyed, and their skills have been rendered useless. In the process, they have been pushed down toward poverty from whence they came. This particular group is Negro, and the chances of ever breaking through, of returning to the old conditions, are very slim. Yet their plight is not exclusively racial, for it is shared by the semi-skilled and unskilled workers who are the victims of technological unemployment in the mass-production industries. They are involved in an interracial misery. These people are the rejects of the affluent society. They never had the right skills in the first place, or they lost them when the rest of the economy advanced. They are the ones who make up a huge portion of the culture of poverty in the cities of America. They are to be counted in the millions. ... there are new definitions of what man can achieve, of what…arrow_forwarda. Suppose a restaurant hires only women to wait on tables, and only men to cook the food and clean the dishes. Is this most likely to be indicative of employer, employee, consumer, or statistical discrimination? b. The dropout rate of minority and international students at U.S. colleges and universities is higher than it is for white American students. Suppose you strongly believe this is due to discrimination. Is the empirical pattern most likely indicative of employer (college administrations), employee (college faculty and staff), consumer (students), or statistical discrimination?arrow_forwardSuppose the discrimination coefficient increases as the firm employs more black workers. In particular, suppose the discrimination coefficient is d = 0.01 EB where EB is the number of blacks hired by the firm so that each employer facing competitive wages of wW for whites and wB for blacks acts as if she faces competitive wages of wW for whites and wB(1 + d) for blacks. As usual, assume the labor market is competitive so that the firm faces wages of wB and wW. Lastly, assume that the firm must employ 200 workers. Define the wage ratio to be wW / wB and do the following:a. Solve for the number of blacks hired as a function of the wage ratio. Graph the number of blacks hired against the wage ratio.b. Solve for the number of whites hired as a function of the wage ratio. Graph the number of whites hired ( x-axis) against the wage ratio ( y-axis).arrow_forward
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