Gender, Race, and Ethnicity in the Labor Market Chapter 12 Gender, Race, and Ethnicity in the Labor Market

Table 12.1: Shares of the Civilian Labor Force for Major Demographic Groups: 1984, 1994, 2004, 2014

Figure 12.1: Mean Earnings as a Percentage of White Male Earnings, Various Demographic Groups, Full-Time Workers over 24 Years Old, 2005

Why Do Women Earn Less Than Men? Age and education account for some of the difference Older women have less education than their male counterparts Female/male earning ratios tend to fall with age

Table 12.2: Female Earnings as a Percentage of Male Earnings, by Age and Education, Full-Time Workers, 2005

Why Do Women Earn Less Than Men? Occupational Distribution Women tend to be overrepresented in low-paying jobs and underrepresented in high-paying jobs

Table 12.3: Female/Male Earnings Ratios and Percentages of Female Jobholders, Full-Time Wage and Salary Workers, by Selected High- and Low-Paying Occupations, 2005

Why Do Women Earn Less Than Men? Hours and Experience Within the same occupations, women work fewer hours and have less work experience than their Male counterparts

Why Do Women Earn Less Than Men? Factors That Can’t be Measured Unobservable productivity characteristics Discrimination in the labor market

Types Of Labor Market Discrimination Wage Discrimination Occupational Discrimination

Measuring Occupational Segregation Does it reflect free choice, labor market discrimination, or pre-market discrimination?

Measuring Wage Discrimination How much women would earn if their productive characteristics were exactly the same as men? How would the hypothetical earnings compare with the actual earnings of men?

The Oaxaca Decomposition Assume that: 1. Only one variable, education affects earnings. 2. The male earnings function is Wm = Am + BmSm 3. The female earning function is Wf = Af + BfSf where: Wm = male earnings, Wf = female earnings Am and Af are intercepts (constants) Bm and Bf are coefficients that tell how earnings increase with one more year of schooling

Measuring the Impact of Discrimination on the Wage Dollars Men’s Earnings Function Women’s Earnings Function Schooling sF sM wM wF M wF F

Earning Differentials Between Black And White Americans Black men have lower LFPRs and higher unemployment rates than white men Black workers are more likely than white workers to be laid off in a recession

Table 12.4: Employment Ratios, Labor Force Participation Rates, and Unemployment Rates, by Race and Gender,* 1970-2005

Earning Differentials By Ethnicity Earnings and Educational Attainment Vary Widely Across Ethnic Groups Language Proficiency Is an Important Variable in Explaining the Wage Gap Between Hispanics and Non Hispanics

Table 12.5: Male Earnings Differences, by Ancestry, 1990

Theories of Market Discrimination Personal Prejudice - Employer, Employee, and Customer Statistical Discrimination Non Competitive Forces Models

Personal Prejudice Models 1. Biased Employer – Acts as if Wf = Wf +d 2. Biased Employee – Acts as if Wm = Wm -d 3. Biased Customer – Acts as if P = P +d Where d is the Discrimination Variable

Personal Prejudice Model - Employer Assume: 1. MRPm = MRPf 2. A competitive labor market 3. Wm>Wf Under these conditions, a nonbiased employer will hire females up to the point where Wf = MRPf The biased employer will hire females up to the point where Wf + d = MRPf, and d is a measure of discrimination

Figure 12.2: Equilibrium Employment of Women or Minorities in Firms that Discriminate

Figure 12.3: Market Demand for Women or Minorities as a Function of Relative Wages

Figure 12.4: Effects on Relative Wages of an Increased Number of Nondiscriminatory Employers

Figure 12.5: Effects on Relative Wages of a Decline in the Discriminatory Preferences of Employers

Personal Prejudice Model - Customer If customers prefer to be served by white males: Occupational segregation and discrimination may occur, or women will have to accept lower pay or be better qualified than men to work in those jobs. 2. Firms that cater to prejudiced customers will pay higher wages and charge higher prices.

Personal Prejudice Model - Employee If white male employees are discriminatory: Non discriminating firms will have to pay them a compensating differential, or, 2. Segregate the workplace or segregate by title

Statistical Discrimination An employer may unknowingly discriminate if he uses group characteristics to screen job applicants Even if the use of group characteristics leads to correct hiring decisions on average, it will discriminate against members of the group who are atypical

Federal Programs to End Discrimination Equal Wage Act of 1963 - What it didn’t do. Title 7 of the Civil Rights Act of 1964 - What it remedied. Disparate Treatment Disparate Impact Comparable Worth Federal Contract Compliance Program and Affirmative Action

Example 12.4: Comparable Worth and the University The Market for Computer Science and English Professors

Table 12.6: Change in the Racial Composition of a 1,600-Person Job Group with Nondiscriminatory Hiring from a Pool That Is 12% Black (20% yearly turnover rate)