4) Discrimination

Question 1

Production function

Answer 1

-a mapping from inputs to output telling me what is feasible for me to do

-entrepreneur chooses inputs

Question 2

Marginal product characteristics?

Answer 2

-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

Question 3

What do wages equal to maximize profit?

Answer 3

• wage = MPL = MCL

Question 4

If supply of labour is constant, what do we adjust?

Answer 4

-wages

Question 5

What 3 factors come from gender earning disparities?

Answer 5

-participation in labour share
-paid hours worked
-wages

Question 6

What 3 discriminations are faced by women?

Answer 6

• individual characteristics
  -statistical inference
  -animus

Question 7

If there is equal pay what is gender ratio?

Answer 7

-marginal product of labour is the same

Question 8

What does it mean by individual characteristics of women in gender pay?

Answer 8

-change the rate of how substitute genders

-am/af rate of substitutions

-less schooling etc , input is less

Question 9

What does it mean by statistical inference?

Answer 9

-employer does not know gender, and estimates rate of substitution (am/af)

-maybe, on average gender correlates to individual characteristics

Question 10

Problem with statistical inference?

Answer 10

-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

Question 11

What does it mean by animus?

Answer 11

• psychic loss subtracts from profits

-ϕ lf

Question 12

Why is animus firms not driven out?

Answer 12

-barriers to entry are key friction

-only exists this way

Question 13

If a firm hires both men and women, what can we infer?

Answer 13

• perfect substitutes
  -cost of hiring both is the same (essentially even with animus , as wage is lower)

Question 14

How do we design policy for this discrimination?

Answer 14

• prod : subsidize child care

-stat disc: provide information

-animus: punish employers

Question 15

Why do not all immigrants have a jump in earnings?

Answer 15

-selection bias
-marginal effect vs scale effect
-effect on native wage

Question 16

Aggregate production function?

Answer 16

-maps total amount of input into total amount of output for whole economy

Question 16

If natives and migrants are complements?

Answer 16

More Migrants, makes natives more efficient , therefore wages of natives go up

as total output (Y) increases

Question 16

If natives and migrants are subtituties?

Answer 16

-lower wage with higher L

Question 17

When are there no diminishing returns on an increase in labour?

Answer 17

-when you increase capital

-however diminishing if you hold capital constant

Question 17

Entrepreneurs only enter until?

Answer 17

-when profit exceeds opportunity cost

Question 17

How does market stabilize?

Answer 17

-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

Question 18

How can wages be different for same job in diff firms?

Answer 18

-different perceived marginal product of labour

Question 19

When talking about wages what is important to talk about?

Answer 19

marginal product of labour with amount of labour or productivity

or marginal product of capital for firms entering market