4) Discrimination Flashcards
Production function
-a mapping from inputs to output telling me what is feasible for me to do
-entrepreneur chooses inputs
Marginal product characteristics?
-non negative shown by First derivative (optimum, FOC = 0 )
more output that input if greater than 0
-second derivative is negative to show diminishing marginal product
What do wages equal to maximize profit?
- wage = MPL = MCL
If supply of labour is constant, what do we adjust?
-wages
What 3 factors come from gender earning disparities?
-participation in labour share
-paid hours worked
-wages
What 3 discriminations are faced by women?
- individual characteristics
-statistical inference
-animus
If there is equal pay what is gender ratio?
-marginal product of labour is the same
What does it mean by individual characteristics of women in gender pay?
-change the rate of how substitute genders
-am/af rate of substitutions
-less schooling etc , input is less
What does it mean by statistical inference?
-employer does not know gender, and estimates rate of substitution (am/af)
Problem with statistical inference?
-self perpetuating
-if women expected to quit job
more, then are given less job training, get paid less, quit more, confirming beliefs
-statistical discrimination can easily lead to segregation
What does it mean by animus?
- psychic loss subtracts from profits
-ϕ lf
Why is animus firms not driven out?
-barriers to entry are key friction
-only exists this way
If a firm hires both men and women, what can we infer?
- perfect substitutes
-cost of hiring both is the same (essentially even with animus , as wage is lower)
How do we design policy for this discrimination?
- prod : subsidize child care
-stat disc: provide information
-animus: punish employers
Why do not all immigrants have a jump in earnings?
-selection bias
-marginal effect vs scale effect
-effect on native wage
Aggregate production function?
-maps total amount of input into total amount of output for whole economy
If natives and migrants are complements?
More Migrants, makes natives more efficient , therefore wages of natives go up
as total output (Y) increases
If natives and migrants are subtituties?
-lower wage with higher L
When are there no diminishing returns on an increase in labour?
-when you increase capital
-however diminishing if you hold capital constant
Entrepreneurs only enter until?
-when profit exceeds opportunity cost
How does market stabilize?
-more migrants more total output , number of firms increases
so higher opportunity cost for firms , as demand for labour is higher
-firms enter until profit is back to R (marginal cost) and L/K ratio stabilizes
How can wages be different for same job in diff firms?
-different perceived marginal product of labour
When talking about wages what is important to talk about?
marginal product of labour with amount of labour or productivity
or marginal product of capital for firms entering market
