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Lecture Issues in economics today - Chapter 30

The following will be discussed in this chapter: The monopolistic competitor in the short and long runs, product differentiation, the characteristics of monopolistic competition, price discrimination. | Chapter 30 Gender Chapter Objectives WHAT IS DISCRIMINATION WHY WOMEN MAKE LESS THAN MEN MODELING SEX DISCRIMINATION What is Discrimination Disparate Treatment Discrimination treating two otherwise equal people differently on the basis of gender Adverse Impact Discrimination doing something that is not necessarily discriminatory on its face but that impacts some groups more negatively than others Rational or Statistical Discrimination discrimination that is based on sound statistical evidence and is consistent with profit maximization Measuring and Detecting Discrimination Regression techniques Statistical methods which seek to determine if the differences in treatment for men and women could have happened by random chance. Auditing techniques Sending paid actors into a situation to determine if people with identical economic characteristics are treated differently based on gender. Why Women Make Less than Men Pregnancy Loss of time in the field and intermittent absence can put women at a economic disadvantage. (Many times this difference in treatment is against the law.) Stay-at-home Moms 98% of stay-at-home parents are women leaving them out of the job market for extended periods of time. Time out of the labor market causes women to lose the period of rapid economic advancement. Age-Earnings Profile Why Women Make Less than Men (continued) Different Professions Teachers (83%) Nurses (93%) Social Workers (69%) Day Care workers (97%) Secretaries (99%) Vs Mechanics(4%), Construction Workers (2%), Truck Drivers(5%) Flexible Employment Women, more than men, tend to choose jobs that allow them to deal with her children’s activities and illnesses. Why Women Make Less than Men (continued) Sociology vs. Economics Economic Explanation for pay differences People make choices and one of the consequences of those choices is their earning capacity. If women choose professions that do not pay well, to have and stay home with children jobs that allow them to deal with their children they will make less money. Sociology vs. Economics (continued) Sociological Explanation for pay differences Women are socialized to pick certain professions into being the parent to stay home into being the parent that sacrifices career for family which causes them to be paid less. Modeling Sex Discrimination Labor market for jobs only men are allowed do. Wage SND D wND Labor market for jobs that women who work must do. Wage SND D SD SD wmen wwomen Why Competition Would Eliminate Discriminatory Pay Businesses that hired only men at the higher wage would have higher costs than businesses that did not discriminate. Businesses that did not discriminate could lower their prices and take the market share of those firms that did discriminate. As this happened firms would see that discrimination was not consistent with maximizing profits and would stop discriminating. Why Competition Would Not Necessarily Eliminate Discrimination In industries where there is economic profit, firm owners may continue to discriminate and consider it a price they are willing to pay so as to not employ women. In industries in which the customer chooses which business to patronize based on gender, firms may be willing to discriminate because their profit maximizing interest and discrimination are consistent. Consumption Market Discrimination Women pay more for automobiles. Many women argue that they pay more for dry cleaning (evidence is ambiguous.) Women pay less for automobile insurance and pay more for retirement annuities because they generally are safer drivers and live longer.