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Will a free market tend to encourage or discourag…

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Problem 7 Medium Difficulty

Does a gap between the average earnings of men and women, or between whites and blacks, prove that
employers are discriminating in the labor market? Explain briefly.

Answer

So, discrimination is not the only reason behind the wage differential between the certain section
or group of employees.

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Principles of Microeconomics for AP® Courses

Chapter 15

Labor Markets and Income

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and earnings gap actually cannot be explained by discrimination, especially if there is no governmental discrimination. In other words, if you look at a case like South Africa, where there was an apartheid for many, many years, in some cases in South Africa you could explain wage differentials by government controlled discrimination. But in a free market situation, that's not the case. If we just look at a few key components, there are many more. But if we just look at a few, this helps explain that, for example, earnings tend to increase with age. As you get more and more experienced, you become more and more valuable as an employee because you're more and more productive. So we expect someone who's older to make more, for example, than a teenager on the minimum wage. So if earnings go up with age, then that means that groups that are older are gonna tend to make more money, while the average age of a white person in America is higher than the average age of a black person. Similarly, the average age of an Asian in America is higher than the average age of whites, so it's not uncommon then that Asians as a group earned more than whites and whites as a group earned more than blacks. Another issue would be literacy rates, and I hope you all got the joke. If you didn't, it's okay. Keep trying. So, for example, if one group has a higher literacy rate than another, you would expect the group with the higher literacy rate to get paid more. Why? Well, there are more jobs that require literacy than not. Additionally, the jobs that get paid more money are all jobs usually that require a person to be literate. So if a group has a higher percentage of illiterate people, then what's going to happen? They're not going to get proportionally as many of the higher paying jobs. 1/3 point would be occupational choices. So, for example, men tend to choose jobs that make more money. If a woman were to choose that job, then she too, would make more money. But what tends to happen? Women tend not to choose stem fields. Some do, but women is a group tend not to write. If a woman does go into medicine, she tends to be a nurse, not a doctor. If a man goes into medicine. He tends to be a doctor and not a nurse, so men tend to choose occupations that make more money. Just one more point before we end. Here is the number of hours worked. It tends to be the case that whites tend to work more hours than blacks, at least in certain occupations. Men tend to work more hours than women, so if you work more hours on average, it makes sense that you're going to get paid more and again. If you compare another minority group like Asians, you find that Asians tend to work even more hours than whites in many cases, right? And if you look at the differences between minority groups, you find that Asians also tend to Merck tend to work more hours than, say, Hispanics.

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Principles of Microeconomics for AP® Courses

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Problem

Will a free market tend to encourage or discourag…

Problem 7 Medium Difficulty

Does a gap between the average earnings of men and women, or between whites and blacks, prove that
employers are discriminating in the labor market? Explain briefly.

Answer

So, discrimination is not the only reason behind the wage differential between the certain section
or group of employees.

Related Courses

Principles of Microeconomics for AP® Courses

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Discussion

Top Educators

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Watch More Solved Questions in Chapter 15

Video Transcript

Steven A. Greenlaw, David Shapiro, Timothy Taylor

Principles of Microeconomics for AP® Courses

So, discrimination is not the only reason behind the wage differential between the certain sectionor group of employees.

Principles of Microeconomics for AP® Courses

Steven A. Greenlaw, David Shapiro, Timothy TaylorPrinciples of Microeconomics for AP® Courses

So, discrimination is not the only reason behind the wage differential between the certain section
or group of employees.

Steven A. Greenlaw, David Shapiro, Timothy Taylor

Principles of Microeconomics for AP® Courses