Слайд 2Earnings and Discrimination
Differences in Earnings in the United States Today
The typical physician
![Earnings and Discrimination Differences in Earnings in the United States Today The](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-1.jpg)
earns about $200,000 a year.
The typical police officer earns about $50,000 a year.
The typical farm worker earns about $20,000 a year.
Слайд 3Earnings and Discrimination
What causes earnings to vary so much?
Wages are governed by
![Earnings and Discrimination What causes earnings to vary so much? Wages are](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-2.jpg)
labor supply and labor demand.
Labor demand reflects the marginal productivity of labor.
In equilibrium, each worker is paid the value of his or her marginal contribution to the economy’s production of goods and services.
Слайд 4SOME DETERMINANTS OF EQUILIBRIUM WAGES
Compensating differentials
Human capital
Ability, effort, and chance
Signaling
The superstar phenomenon
![SOME DETERMINANTS OF EQUILIBRIUM WAGES Compensating differentials Human capital Ability, effort, and](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-3.jpg)
Слайд 5Compensating Differentials
Compensating differential refers to a difference in wages that arises from
![Compensating Differentials Compensating differential refers to a difference in wages that arises](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-4.jpg)
nonmonetary characteristics of different jobs.
Coal miners are paid more than others with similar levels of education.
Night shift workers are paid more than day shift workers.
Professors are paid less than lawyers and doctors.
Слайд 6Human Capital
Human capital is the accumulation of investments in people, such as
![Human Capital Human capital is the accumulation of investments in people, such](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-5.jpg)
education and on-the-job training.
The most important type of human capital is education.
Слайд 7Human Capital
Education represents an expenditure of resources at one point in time
![Human Capital Education represents an expenditure of resources at one point in](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-6.jpg)
to raise productivity in the future.
By the year 2000, a man with a college degree earned more than 89 percent more than without one. Women showed a 70 percent increase in earnings due to a college degree.
Слайд 8Table 1 Average Annual Earnings
by Educational Attainment
Copyright©2004 South-Western
![Table 1 Average Annual Earnings by Educational Attainment Copyright©2004 South-Western](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-7.jpg)
Слайд 9Educational premium, Russia and Ukraine
![Educational premium, Russia and Ukraine](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-8.jpg)
Слайд 10Ability, Effort, and Chance
Why has the gap in earnings between skilled
![Ability, Effort, and Chance Why has the gap in earnings between skilled](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-9.jpg)
and unskilled workers risen in recent years?
International trade has altered the relative demand for skilled and unskilled labor.
Changes in technology have altered the relative demand for skilled and unskilled labor.
Слайд 11Ability, Effort, and Chance
Natural ability is important for workers in all occupations.
Many
![Ability, Effort, and Chance Natural ability is important for workers in all](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-10.jpg)
personal characteristics determine how productive workers are and, therefore, play a role in determining the wages they earn.
Слайд 12An Alternative View of Education: Signaling
Firms use educational attainment as a way
![An Alternative View of Education: Signaling Firms use educational attainment as a](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-11.jpg)
of sorting between high-ability and low-ability workers.
It is rational for firms to interpret a college degree as a signal of ability.
Слайд 13The Superstar Phenomenon
Superstars arise in markets that exhibit the following characteristics:
Every customer
![The Superstar Phenomenon Superstars arise in markets that exhibit the following characteristics:](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-12.jpg)
in the market wants to enjoy the good supplied by the best producer.
The good is produced with a technology that makes it possible for the best producer to supply every customer at a low cost.
Слайд 14Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages
Why are some workers’ wages
![Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages Why are some workers’](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-13.jpg)
set above the level that brings supply and demand into equilibrium?
Minimum-wage laws
Market power of labor unions
Efficiency wages
Слайд 15Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages
Unions
A union is a
![Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages Unions A union is](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-14.jpg)
worker association that bargains with employers over wages and working conditions.
Strike
A strike refers to the organized withdrawal of labor from a firm by a union.
Слайд 16Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages
Efficiency Wages
The theory of
![Above-Equilibrium Wages: Minimum-Wage Laws, Unions, and Efficiency Wages Efficiency Wages The theory](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-15.jpg)
efficiency wages holds that a firm can find it profitable to pay high wages because doing so increases the productivity of its workers. High wages may:
reduce worker turnover.
increase worker effort.
raise the quality of workers that apply for jobs at the firm.
Слайд 17THE ECONOMICS OF DISCRIMINATION
Discrimination occurs when the marketplace offers different opportunities to
![THE ECONOMICS OF DISCRIMINATION Discrimination occurs when the marketplace offers different opportunities](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-16.jpg)
similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics.
Слайд 18THE ECONOMICS OF DISCRIMINATION
Although discrimination is an emotionally charged topic, economists try
![THE ECONOMICS OF DISCRIMINATION Although discrimination is an emotionally charged topic, economists](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-17.jpg)
to study the topic objectively in order to separate myth from reality.
Слайд 19Measuring Labor-Market Discrimination
Discrimination is often measured by looking at the average wages
![Measuring Labor-Market Discrimination Discrimination is often measured by looking at the average wages of different groups.](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-18.jpg)
of different groups.
Слайд 20Measuring Labor-Market Discrimination
Even in a labor market free of discrimination, different people
![Measuring Labor-Market Discrimination Even in a labor market free of discrimination, different people have different wages.](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-19.jpg)
have different wages.
Слайд 21Measuring Labor-Market Discrimination
People differ in the amount of human capital they have
![Measuring Labor-Market Discrimination People differ in the amount of human capital they](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-20.jpg)
and in the kinds of work they are willing and able to do.
Слайд 22Measuring Labor-Market Discrimination
Simply observing differences in wages among broad groups—white and black,
![Measuring Labor-Market Discrimination Simply observing differences in wages among broad groups—white and](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-21.jpg)
men and women—says little about the prevalence of discrimination.
Слайд 23Table 2 Median Annual Earnings by Race and Sex
Copyright©2004 South-Western
![Table 2 Median Annual Earnings by Race and Sex Copyright©2004 South-Western](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-22.jpg)
Слайд 24Measuring Labor-Market Discrimination
Because the differences in average wages among groups in part
![Measuring Labor-Market Discrimination Because the differences in average wages among groups in](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-23.jpg)
reflect differences in human capital and job characteristics, they do not by themselves say anything about how much discrimination there is in the labor market.
Слайд 25Discrimination by Employers
Firms that do not discriminate will have lower labor costs
![Discrimination by Employers Firms that do not discriminate will have lower labor](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-24.jpg)
when they hire the employees discriminated against.
Слайд 26Discrimination by Employers
Nondiscriminatory firms will tend to replace firms that discriminate.
![Discrimination by Employers Nondiscriminatory firms will tend to replace firms that discriminate.](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-25.jpg)
Слайд 27Discrimination by Employers
Competitive markets tend to limit the impact of discrimination on
![Discrimination by Employers Competitive markets tend to limit the impact of discrimination](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-26.jpg)
wages.
Firms that do not discriminate will be more profitable than those firms that do discriminate.
Слайд 28Discrimination by Customers and Governments
Although the profit motive is a strong force
![Discrimination by Customers and Governments Although the profit motive is a strong](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-27.jpg)
acting to eliminate discriminatory wage differentials, there are limits to its corrective abilities.
Customer preferences
Government policies
Слайд 29Discrimination by Customers and Governments
Customer preferences:
If customers have discriminatory preferences, a
![Discrimination by Customers and Governments Customer preferences: If customers have discriminatory preferences,](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-28.jpg)
competitive market is consistent with a discriminatory wage differential.
This will happen when customers are willing to pay to maintain the discriminatory practice.
Слайд 30Discrimination by Customers and Governments
Government policies:
When the government mandates discriminatory practices
![Discrimination by Customers and Governments Government policies: When the government mandates discriminatory](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-29.jpg)
or requires firms to discriminate, this may also lead to discriminatory wage differentials.
Слайд 31Summary
Workers earn different wages for many reasons.
To some extent, wage differentials compensate
![Summary Workers earn different wages for many reasons. To some extent, wage](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-30.jpg)
workers for job attributes.
Workers with more human capital get paid more than workers with less human capital.
Слайд 32Summary
The return to accumulating human capital is high and has increased over
![Summary The return to accumulating human capital is high and has increased](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-31.jpg)
the past decade.
There is much variation in earnings that cannot be explained by things economists can measure.
Слайд 33Summary
The unexplained variation in earnings is largely attributable to natural ability, effort,
![Summary The unexplained variation in earnings is largely attributable to natural ability,](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-32.jpg)
and chance.
Some economists have suggested that more-educated workers earn higher wages because workers with high natural ability use education as a way to signal their high ability to employers.
Слайд 34Summary
Wages are sometimes pushed above the equilibrium level because of minimum-wage laws,
![Summary Wages are sometimes pushed above the equilibrium level because of minimum-wage](/_ipx/f_webp&q_80&fit_contain&s_1440x1080/imagesDir/jpg/373732/slide-33.jpg)
unions, and efficiency wages.
Some differences in earnings are attributable to discrimination on the basis of race, sex, or other factors.
When measuring the amount of discrimination, one must correct for differences in human capital and job characteristics.