Wr = 300 + 75s ve 14 years of schooling and women have 13 years of schooling. average male-female wage differential in the labor market? f this wage differential may be due to discrimination? Note that ways to calculate this, so do it both ways and compare the two a ur answer in percent terms. nen have surpassed men in educational attainment with women h cars of education and men having 14 What would the wrage gan

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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5a

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5c

5. Suppose years of schooling, s, is the only variable that affects earnings. The equations for the
weekly salaries of male and female workers in 1970 are given by:
Wm = 500 + 100s
Wr = 300 + 75s
%3D
On average, men have 14 years of schooling and women have 13 years of schooling.
a. What is the average male-female wage differential in the labor market?
b. How much of this wage differential may be due to discrimination? Note that there are
two possible ways to calculate this, so do it both ways and compare the two answers you
get. Place your answer in percent terms.
c. By now, women have surpassed men in educational attainment with women having on
average 15 years of education and men having 14. What would the wage gap be,
assuming the wage equations remained unchanged?
d. How much of this gap is unexplained by education? Use just one of the methods and
place your answer in percent terms.
e. What else besides discrimination may contribute to this gap?
Transcribed Image Text:5. Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers in 1970 are given by: Wm = 500 + 100s Wr = 300 + 75s %3D On average, men have 14 years of schooling and women have 13 years of schooling. a. What is the average male-female wage differential in the labor market? b. How much of this wage differential may be due to discrimination? Note that there are two possible ways to calculate this, so do it both ways and compare the two answers you get. Place your answer in percent terms. c. By now, women have surpassed men in educational attainment with women having on average 15 years of education and men having 14. What would the wage gap be, assuming the wage equations remained unchanged? d. How much of this gap is unexplained by education? Use just one of the methods and place your answer in percent terms. e. What else besides discrimination may contribute to this gap?
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