Chapter 19 - The economics of labor market discrimination. After completing this unit, you should be able to: Describe the sources of earnings differences among people, define discrimination, summarize the predominant economic models of discrimination,…
Trang 1Introduction to Economics: Social Issues and Economic Thinking
Wendy A Stock
PowerPoint Prepared by
Z Pan
Chapter 19
The Economics of Labor Market Discrimination
Trang 2Ø Describe the sources of
earnings differences
among people
Ø Define discrimination
Ø Summarize the
predominant economic
models of discrimination
Ø Model the effects of discrimination
Ø Discuss the main antidiscrimination policies in the U.S and the research findings
on the effectiveness of these policies
After studying this chapter, you should be
able to:
Trang 3Ø The U.S workforce has become more racially
and gender diverse over the past 30 years
group as a percentage of the earnings of
another group
Ø The Pay Gap is the percent difference in
earnings between two groups
RACE AND GENDER IN THE U.S
WORKFORCE
Trang 4Copyright © 2013 John Wiley
& Sons, Inc.
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RACE AND GENDER IN THE U.S
WORKFORCE
Trang 5Ø Demand and supply of labor
Ø Levels of education and training
Ø Full-time vs part-time
Ø Cost of living differences between areas
Ø Types of jobs
Ø About half of the pay gap between black and white workers is explained by differences in the education, age, sex, location, occupation, and industry characteristics
causes for the pay gaps
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& Sons, Inc.
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Education Attainment
by Race and Ethnicity
Trang 7Ø Discrimination in the labor market occurs when workers who are equally productive are treated differently based on characteristics that are not related productivity, or when workers who are not equally productive are treated the same
because of some arbitrary characteristic
WHAT IS DISCRIMINATION?
Trang 8Ø In Taste-based Models of discrimination , people are assumed to have preferences not to work
with, hire, or buy from the discriminated group
Ø Two Types:
Ø Employer Discrimination
Ø Customer Discrimination
Copyright © 2013 John Wiley
& Sons, Inc.
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Taste-based Models of Discrimination
Trang 9Employer Discrimination occurs when employers base their
employment decisions on prejudice against certain workers.
Employer discrimination
Trang 10Copyright © 2013 John Wiley
& Sons, Inc.
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Relative Profits of Discriminatory and
Nondiscriminatory Firms
Trang 11Ø Customer Discrimination occurs when
customers base their purchasing decisions on the race, sex, or other demographic
characteristics of the workers with whom they interact
Customer discrimination
Trang 12Ø In Incomplete Information Models of
discrimination, differences in labor market
outcomes arise because membership in a group conveys information about a person ’s potential skills and productivity
Ø Statistical Discrimination occurs when people
use information about the average
characteristics of a group when making
decisions about an individual member of that
group E.g Racial Profiling
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& Sons, Inc.
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Incomplete Information Models
Trang 13Ø The 1964 Civil Rights Act was the first federal legislation to prohibit employment discrimination
Ø Affirmative Action is a set of policies that
mandate taking action to ensure the equal
treatment of people regardless of their race,
creed, color, or national origin Affirmative action requires some organizations to take action to
increase the representation of women and
minorities
ANTIDISCRIMINATION POLICIES IN THE
UNITED STATES
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& Sons, Inc.
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Theoretical Impacts of Antidiscrimination
Laws
Trang 15Research on the Effects of Antidiscrimination
Laws - race
Trang 16Copyright © 2013 John Wiley
& Sons, Inc.
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Research on the Effects of Antidiscrimination
Laws - gender
Trang 17Research indicates:
Ø Age discrimination laws are associated with
increased employment of older workers
Ø ADA is associated with lower levels of
employment of disabled workers
Age and Disability
Trang 18Copyright © 2013 John Wiley
& Sons, Inc.
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1 List and explain three reasons why we
observe a wage differential when comparing the average wages of males and females.
2 What is an earnings ratio? What does it
mean if the female/male earnings ratio is equal to 1? What does it mean if the
black/white earnings ratio declines?
Trang 19Key Concepts
• Earnings ratio
• Pay gap
• Discrimination
• Taste-based models of discrimination
• Employer discrimination
• Customer discrimination
• Statistical discrimination
• 1964 Civil Rights Act
• Affirmative action