3.6.7 - Discrimination in the Labour Market Flashcards
What is wage discrimination?
Paying different workers differing rates for the same job.
What types of markets can employers wage discriminate?
Imperfectly competitive labour markets.
Why can employers wage discriminate in imperfectly competitive labour markets?
They have sufficient market power to do so.
Why do employers wage discriminate?
They gain at the expense of their workers.
Draw a diagram demonstrating wage bills of firms that wage discriminate.
The wage bill falls to OBAL1 as the firm pays each worker the minimum they are willing to accept.
What is the necessary condition for wage discrimination?
Employers must be able to split firms into groups to pay them different amounts.
What are the main types of wage discrimination?
Gender
Race
Age
When was equal pay legislation put into government?
1972.
What sector is the gender pay gap most pronounced?
Private, 17.1%.
What is the stat for women earning below minimum wage?
Women are 1.8x more likely to earn below minimum wage compared to men.
221,000 women to 121,000 men.
What are the main reasons for women earning less than men?
Predominance in low-paid industries.
Discrimination against women.
Attachment to the labour force is weaker.
Higher labour turnover of women.
Why is a predominance in low paid industries a reason for women to earn less?
Women are often under-represented in the higher-level posts in any given occupation.
Worth noting that many women are paid less for the same job.
Why is the discrimination of women a reason for women to earn less?
Women are disproportionately represented in industries where average sizes of firms and plants are small.
Therefore, these firms pay less and offer less promotions. Alongside, these industries are unlikely to be unionised and women are also less likely to be union members although this is becoming less important as unions become weaker.
Why is the female attachment to the labour force being weaker a reason for women to earn less?
Each year of work experience raises the income of both men and women by 3%.
Many women leave the work force to raise families and lose out on the exponential growth of additional work experience relative to men.
When women leave the workforce to raise families, firms need to train new female employees to replace those that just left.
Draw a graph that demonstrates the wage rate due to discrimination of women
