Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given bywm = 500 + 100sandwf = 300 + 75sOn average, men have 14 years of schooling and women have 12 years of schooling.a. What is the male-female wage differential in the labor market?b. Using the Oaxaca decomposition, calculate how much of this wage differential is due to discrimination?c. Can you think of an alternative Oaxaca decomposition that would lead to a different measure of discrimination? Which measure is better?
Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given bywm = 500 + 100sandwf = 300 + 75sOn average, men have 14 years of schooling and women have 12 years of schooling.a. What is the male-female wage differential in the labor market?b. Using the Oaxaca decomposition, calculate how much of this wage differential is due to discrimination?c. Can you think of an alternative Oaxaca decomposition that would lead to a different measure of discrimination? Which measure is better?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given by
wm = 500 + 100s
and
wf = 300 + 75s
On average, men have 14 years of schooling and women have 12 years of schooling.
a. What is the male-female wage differential in the labor market?
b. Using the Oaxaca decomposition, calculate how much of this wage differential is due to discrimination?
c. Can you think of an alternative Oaxaca decomposition that would lead to a different measure of discrimination? Which measure is better?
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