LABOR ECONOMICS (LL+ACCESS)
8th Edition
ISBN: 9781264909339
Author: BORJAS
Publisher: MCG
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Chapter 9, Problem 15P
(a)
To determine
Identify the policy that would be better at combating discrimination and inequality.
(b)
To determine
Identify the policy that would be best at combating discrimination and inequality in terms of the job market.
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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?
In 2006, Evo Morales assumed the presidency in Bolivia, a South American country in which official commerce is done in Spanish. Morales was the first Bolivian president of indigenous decent. As president, he quickly instituted reforms that were designed to reduce discrimination against indigenous populations with the aim of eventually reducing inequality. Suppose discrimination before Morales took two forms: discrimination in education by not providing state funds to educate all children (and particularly not educating indigenous children in Spanish) and discrimination in the job market by firms not willing to hire indigenous workers.a. In terms of education, which policy do you think would be more successful at combating discrimination and inequality: (1) providing state funds to educate all people exclusively in their native languages or (2) providing state funds for a public education system that requires all people to learn Spanish, as well as a second, indigenous language? Why?b.…
Now suppose that there is mobility in the labour market in country Alpha and we are in the pre-minimum wage period. Country Alpha receives migrants from country Beta and these migrants are positively selected.
a) If we believe in the Roy model, do you expect country Alpha or country Beta to have a higher income inequality?
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Chapter 9 Solutions
LABOR ECONOMICS (LL+ACCESS)
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