labor market discrimination
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Labor Market Discrimination. Discrimination By Employer, Customer, and Employee. Labor Market Discrimination. The definition of Labor Market Discrimination is: - PowerPoint PPT PresentationTRANSCRIPT
Labor Market Discrimination
Discrimination
By Employer, Customer, and Employee
Labor Market Discrimination
The definition of Labor Market Discrimination is: It exists when 2 equally qualified
individuals are treated differently solely on the basis of their gender, race, ethnicity, disability, etc.
Feed Back
If such behavior is encountered it is only logical that those being affected by this labor market discrimination view the returns on human capital investment to be lower
Consequently they will have less incentive to invest in human capital
Feed Back
Furthermore, if this “feed-back” is widely spread such as to be “known” by younger individuals it could even lead to many dropping out of school or not pursuing higher education or advanced degrees
Subtle and Not so Subtle Barriers
In 1991 a jury found in favor of a woman executive at Texaco who was not promoted because of concerns that the promotion would have required her to travel to Latin America and South Africa where “she might be raped or murdered.”
Subtle and Not so Subtle Barriers
Woman working for GTE (now Verizon) California was promoted between 1977 and 1982 but was then told by her boss that no further promotions would be possible since "women were not suited for managerial positions as they lacked military training".
Glass Ceiling
In 1991 as part of the Civil Rights Act of 1991 21 member committee was formed and chaired by the Labor secretary to determine if there was a “glass ceiling” in the upper management of American firms
Glass Ceiling
In terms of the findings of the commission
There is a glass ceiling and the derives from three sources: Societal/Non-Market Business Government
Glass Ceiling In terms of those reasons under the control of
business are: Outreach and recruitment practices that do not seek
out or reach or recruit minorities and women Corporate climates that alienate and isolate
minorities and women Pipeline Barriers that directly affect opportunity for
advancement Initial placement and clustering in staff jobs or in
highly technical and professional jobs that are not on the career track to the top
Glass Ceiling
In terms of those reasons under the control of business are (continuation):
Lack of mentoring Lack of management training Lack of opportunities for career development,
tailored training, and rotational job assignments that are on the revenue-producing side of the business
Glass Ceiling
In terms of those reasons under the control of business are (continuation):
Little or no access to critical develop mental assignments such as memberships on highly visible task forces and committees
Special or different standards for performance evaluation
Glass Ceiling
In terms of those reasons under the control of business are (continuation):
Biased rating and testing systems Little or no access to informal net-works
of communication Counterproductive behavior and
harassment by colleagues
Glass Ceiling
In terms of those reasons under the control of government are:
Lack of vigorous, consistent monitoring and law enforcement
Weaknesses in the formulation and collection of employment-related data which makes it difficult to ascertain the status of groups at the managerial level and to disaggregate the data
Inadequate reporting and dissemination of information relevant to glass ceiling issues
Measuring Discrimination
However, measuring discrimination is not that simple
For instance, Looking at only wages does not represent
the true level of discrimination since it is likely that personal characteristics may account for some of that disparity
Measuring DiscriminationGender Wage Ratio
010
2030
4050
6070
8090
Unadjusted
UnadjustedData
Human CapitalAdjustments
All VariableAdjustment
The Overcrowding Model
The labor market exhibits SEGREGATION
Consequently: Some jobs are male jobs other are female
jobs Some jobs are white jobs other are minority
jobs
The Overcrowding Model
Assume that workers F and M (female and male) are perfect substitute for each other (i.e. they are homogenous)
Let the labor market be divided into two type of jobs. Job type F accounts for a quarter of the jobs available and job type M accounts for three quarters of the jobs available.
The Overcrowding Model
At first assume that both jobs on average pay the same wage.
Under this circumstances then we would have the following graph
The Overcrowding Model
F type Jobs M type Jobs
w
$ $
L L
S S
DD
The Overcrowding Model
Now assume that at least one of the following is possible: M workers can move easily between job types, yet
F workers can not. F workers can find F type jobs but can enter into M
type jobs. F workers prefer to work only F type jobs Employers of M type jobs will not hire F workers Some other reason that will concentrate F workers
only to F type jobs
The Overcrowding Model
Based on the previous scenarios: Workers will begin to concentrate in F type
jobs There will be less available workers for M
type jobs In a sense, F type jobs become less
“important” than M type jobs or F type jobs become subservient to M type
jobs
The Overcrowding Model
F type Jobs M type Jobs
w
$ $
L L
S S
DD
wF
wM
LF LM
The Overcrowding Model
After the overcrowding in the F type jobs the result is that The wages in the F type jobs are lower
than the wages in the M type jobs (i.e. wM>wF)
This time, F type jobs account now for more than a quarter of the jobs available (LF) and M type jobs accounts for less than three quarters of the jobs available (LM) .
Models of Labor Market Discrimination
Tastes for Discrimination Gary Becker conceptualized discrimination
as a personal prejudice U=U(,W,B) Where U is the utility of the employer are the profits W is the number of White workers And B is the number of Black workers
Gary Becker
He then assumed that U/ > 0 U/W > 0 U/B < 0 Assuming that both White and Black
workers are homogenous
Gary Becker
The normal assumption that workers will be paid
MP*L = w*
Will then become MP*L = w*W
MP*L = w*B(1 + d)
Where d>0
Gary Becker
Hence, w*W = w*B(1 + d)
or w*m = wf*(1 + d)
Where d>0 or w*f / w*m = 1/(1 + d)
EMPLOYEE DISCRIMINATION COEFFICIENTS AND WILLINGNESS TO HIRE
EMPLOYER d
NET WAGE[w X (1+ dj)], IF
wf = $10.00
MAXIMUM WAGE WILLING TO PAY WOMEN, IF
wm = $10.00
A 0 $10.00 $10.00
B 0.25 $12.50 $8.00
C 1 $20.00 $5.00
D 3 $40.00 $2.50
E 9 $100.00 $1.00
THE DEMAND FOR WOMEN WORKERS, EMPLOYERS A TO E
$10.00
$8.00
$5.00
$2.50
$1.00
10 20 30 40 50
Wf
SUPPLY
DEMAND
NUMBER OF WOMEN
WOMEN’S WAGES WHEN EMPLOYERS’ DISCRIMINATION COEFFICIENTS DIFFER
DEMAND
SUPPLY
Wf/Wm
NUMBER OF WOMEN
1/(1+d*)
MARKET EQUILIBRIUM BEFORE AND AFTER ENTRY
SUPPLY
DEMAND BEFORE ENTRY
DEMAND AFTER ENTRY
NUMBER OF WOMEN
Wf/Wm
1/(1+d*)
1
Gary Becker
If the market was purely competitive the Becker discrimination model would not persist
However, it can persist if: If the firm has “monopsony” power If supervisors are discriminating If the employees are discriminating If the costumers are discriminating
Statistical Discrimination
Similar in Context to Racial Profiling Statistical Discrimination against the
individual If the preconceptions is based on accurate
average observations Then there are feed-back effects that
increase the level of discrimination
Customer Discrimination
If Customers do not care who the employees are then the price will be the same whether the employee is male or female (white or black; asian or hispanic)
thus pf* = pm*
Customer Discrimination
If on the other hand the customer prefers male employees than pf*(1 + d) = pm*
If the customer prefers females than pm*(1 + d) = pf*
The one characteristic of this model is that there is market reason for the discrimination to be eradicated.
Employee Discrimination
If m type worker does not like working alongside with f type worker than w*m = wm(1 - d)
Thus, the gross wage of the m type worker would be lowered
If there are two types of jobs (1 and 2) and workers in 1 are only m type and workers in 2 are both m and f, then
Employee Discrimination
If there are two types of jobs (1 and 2) and workers of both type (m and f) in each job type but only m type workers in job type 2 do not care to work with f type workers,then w*1m = w2m(1 - d)
such that w*1m < w2m
Statistical Models
Statistical Discrimination The employer may use “generalized”
information about the employee and may due to that discriminate even based on what may be “actual” or “perceived” information such that wages differ
STATISTICAL DISCRIMINATION BASED ON DIFFERENT DISTRIBUTIONS OF LABOR FORCE
ATTACHMENT FOR MEN AND WOMENPERCENT
ATTACHMENT TO LABOR FORCE
WOMEN MEN
W M
STATISTICAL DISCRIMINATION WHEN THE DISTRIBUTION BY GENDER ARE VERY SIMILAR
PERCENT
ATTACHMENT TO LABOR FORCE
WOMEN
MEN
W M
Human Capital Theory
Solomon Polachek discussed the idea of jobs that provide a smaller or larger penalty of leaving the workforce for some amount of time
If both jobs have the same level skill but one gives a larger penalty for exiting the job for a given period of time (occupation k)
THE HUMAN CAPITAL EXPLANATION OF OCCUPATIONAL SEGREGATION BY GENDER-THE
ROLE OF WAGE PENALTIES TO PERIODS OF NONWORK
W
TIME
(A)
OCCUPATION j
A
C
D’
D
B
E
A
C
D’
D
B
E
(B)
OCCUPATION kW
TIME
Institutional Models
These models assume that the discrimination occurs as part of the organizations internal structure.
It is based on the notion that firms management structure is build upon internal institutional arrangements that have either deliberate or unintentional discrimination repercussions
Institutional Models
There are primarily there Institutional models (which can work separately or in conjunction) The internal Labor Market Primary and Secondary Jobs Feedback Effects
Internal Labor Market
The assumption is that certain firms will generally only promote from within. If for whatever reason, entry level jobs attracted a
certain type of worker or if only certain type of worker will be retained or if only certain type of worker will stay in that job Then upper management will be composed of that
type of worker that remains in that entry level position
Internal Labor Market
Wag
es (
$)
Job Ladder
Firm-Specific Training
Primary and Secondary Jobs
The assumption is that certain firms will generally only promote from a certain type of entry jobs.
In other words, some entry jobs will only allow the workers to reach certain heights within the organization
Internal Labor Market
Wag
es (
$)
Job Ladder
Primary
Secondary
Feedback Effects
Some times employees and employers may discriminate by bringing into the work place the behavior exhibited in the household
So gender roles played in the household labor
are parallel in the work labor
Feedback Effects
Gender Division
of Labor in
the family
Gender Differences
in Labor Market
outcomes