Discrimination and Male- Female Earnings Differential Chapter 12 Benjamin, Gunderson and Riddell

11/17/992Economics 340 Main Questions  How can otherwise equally productive men and women be paid different wages in a competitive labour market?  What Methods are used to measure the extent of discrimination in the labour market?  How much discrimination exists in the Canadian labour market?

11/17/993Economics 340 Main Questions (cont’d)  Is there evidence of discrimination against other groups?  What policies have been adopted to address the effects of discrimination? Which policies have been effective?

11/17/994Economics 340 Overview  There is some debate as to whether discrimination is an economic or a social phenomenon.  Discrimination can occur in other markets besides the labour market.  We will look at gender discrimination but the principles can apply to other forms of discrimination as well.

11/17/995Economics 340 Reasons for Discrimination  Discrimination may occur against females because males have a preference for buying from or working with other males.  It may also occur due to erroneous information about the productivity of females.  Males may also discriminate for reasons of job security.

11/17/996Economics 340 Sources of Discrimination  Employers may discriminate against females through hiring or wage rate practices.  Co-workers may discriminate against females by not giving them the co- operation that all workers need.  Customers may discriminate against females by not buying from them.

11/17/997Economics 340 Theories of Labour Market Discrimination  Demand theories say lower demand for female labour reduces wages.  Supply theories say discrimination is based on the supply of female labour either in crowding or dual labour markets.  Non-competitive theories include such things as imperfect information, queuing theories and deliberate discrimination.

11/17/998Economics 340 Productivity Differences  Much of the perceived differences in productivity can be the result of systemic discrimination.  Traditional roles give females more responsibility for household duties.  One important thing to remember is that discrimination judges individuals by group actions.

11/17/999Economics 340 Feminist Perspectives  There is a feminist perspective (not necessarily shared by all feminists) which blames the general theories of economics for the male bias.  Male domination in economics and the non-personal methods used in economics lead to the stereotyping of females.

11/17/9910Economics 340 Evidence on Male-Female Earnings Differentials  Females tend to earn 60 to 65% of male wages, on average.  This is closer to 70% for full time full year workers and the gap has been slowly closing since the 1960s.  Youth and education will increase the percentage for females.

11/17/9911Economics 340 Empirical Results on Male-Female Differentials  There is a portion of the wage rate differential which can be explained by nothing other than wage rate discrimination.  Discrimination may be largely due to factors outside of the labour market (systemic discrimination).  Uneven distribution between occupations is the largest labour market factor.

11/17/9912Economics 340 Conventional Equal Pay Legislation  Equal pay for the same job within the same company.  This is a “motherhood statement” and is necessary though not very effective.  It only applies to the most blatant of discriminators within a single company.  Employers define the jobs for all employees.

11/17/9913Economics 340 Pay Equity  Employers must have equal pay for work of equal value.  This is still within the same employer and it is the employer who has a large say as to the value of employment.  This is very difficult to enforce as being witnessed by the federal public service settlement.

11/17/9914Economics 340 Equal Employment Opportunity  This means that employers must objectively consider all applicants for employment.  Once again this is a motherhood statement and can only be effective against the most blatant discriminators.  It is often used as a “ad” to promote the employer, i.e. “We are an equal opportunity employer.”

11/17/9915Economics 340 Employment Equity  This is a controversial policy which is often referred to as “reverse discrimination”.  This must be performed over a relatively long period of time so the employer is not forced to accept unqualified employees.  One of the real dangers with this type of policy is that the employer may perpetuate discrimination by hiring someone who will not succeed.