Labor Economics
7th Edition
ISBN: 9780078021886
Author: George J Borjas
Publisher: McGraw-Hill Education
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Question
Chapter 7, Problem 11P
To determine
The percent difference in wages between the children, grandchildren, and great-grandchildren of the two households.
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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.
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
How does path dependency provide an explanation for differentiation in earnings between men & women?
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- Suppose that education is the only factor that affects productivity and that an additional year of education raises wages by 2%. Suppose in 2011 gender wage gap was 13%, and the average man had 15 years of education while the average women had 14 years of schooling. a) Using the wage gap decomposition technique, calculate how much of the 13% wage differential is due to discrimination? b) Now suppose in 2021 the gender wage gap is 10%, but the average woman’s education level is increased to 17 year and the average man’s education increases to16 years. (Assume that the return to education stays same at 2%), Was there a decrease or an increase in wage discrimination in the decade? Why?arrow_forwardDistinguish between Factor Price Equalization and the Stolper-Samuelson theory.arrow_forwarddiscuss the key concepts of the Heckscher-Ohlin Model on factor intensityarrow_forward
- How does skill atrophy provide an explanation for differentiation in earnings?arrow_forwardFactor-price differentials might persist in equilibrium because of O A. compensating differentials where, for example, some jobs are cleaner than others. B. intrinsic differences where, for example, some jobs allow for independence and flexibility. C. intrinsic differences where, for example, the fertility of land can only be increased with costly fertilizers. D. compensating differentials where, for example, engineers must train to acquire adequate skills for employment.arrow_forwardDiscuss how upward-sloping age-earnings profiles can elicit more effort from workers.arrow_forward
- Suppose there are two identical job offers in the same competitive labor market for a software developer position. Both offers have the same salary of $80,000 per year. However, Job A allows the employee to work from home, while Job B requires the employee to commute to the office daily. The average monthly commuting cost for Job B is estimated to be $400. Calculate the compensating differential in this scenario, and determine if it makes economic sense for the employee to choose Job B over Job A. Assume a working year consists of 12 months.arrow_forwardThe figure below shows the proportion of children in earnings quantile conditional on their father's earnings quantile in the US and Denmark, respectively. Based on this information, which of the following statements is correct? US I Child in poorest 20% I Child in richest 20% DENMARK 0.400 0.4 0.4 0.360 0.337 0.3 0.3- 0.253 0.2 0.2 0.167 0.161 0.098 0.1 0.1 0.074 Poorest 20% Richest 20% Poorest 20% Richest 20% Father's earnings quintile Select one: O a. In Denmark, it is far more difficult for the richest families to preserve their status for the next generation than in the US. O b. In the US, 7.4% of those from the poorest 20% of families managed to move up to become part of the richest 20%. O c. The figure suggests that there is very little governments can do to reduce intergenerational transmission of economic status. O d. The data provides support for the "American Dream", a term coined in 1931 by James Truslow Adams that refers to "a dream of social order in which each man and…arrow_forwardSuppose that 15 states decrease the length of the standard work week from 40 to 35 hours. You are interested in the effects of this change on worker productivity. What effects might you expect to see? How would you conduct a difference-in-difference analysis to estimate the impact? What assumption must hold for the difference-in-difference analysis to be valid?arrow_forward
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