3. Over the past 35 years, an increasing number of mothers have gone back to work relatively quickly after giving birth. Consider a labor market where a workerâs wage is a function of his or her years of education past the compulsory level (E), work experience (X), and years of tenure with their current employer (T). Suppose the relationships between wages, education, experience, and tenure for males (M) and females (F) can be represented by the equations
WM = 3 + 0.5E + 0.4X + 0.2T
and
WF = 3 + 0.4E + 0.3X + 0.3T.
On average, E = 4, X =20, and T = 8 for men, while for women the averages are E = 4, X = 14, and T = 4.
A) Find the average wage of men and women. What is the ratio of female to male wages? What is the gap between women and menâs wages in percentage terms?
B) What wage would women earn if they had the same pre-market characteristics as men on average? What would be the ratio of womenâs to menâs wages?
C) Express the amount of current wage discrimination in percentage terms.
Suppose in the analysis that years of tenure are either unmeasurable or unobservable to the researcher. As a result, the analysis produces the following wage equations.
WM = 4.6 + 0.5E + 0.4X
and
WF = 4.2 + 0.4E + 0.3X.
D) Find the average wage of men and women. What is the ratio of female to male wages? What is the gap between women and menâs wages in percentage terms?
E) What wage would women earn if they had the same pre-market characteristics as men on average? What would be the ratio of womenâs to menâs wages?
F) Express the amount of current wage discrimination in percentage terms.
G) Does this (failing to include tenure in the model) overstate or understate the effects of gender discrimination?
3. Over the past 35 years, an increasing number of mothers have gone back to work relatively quickly after giving birth. Consider a labor market where a workerâs wage is a function of his or her years of education past the compulsory level (E), work experience (X), and years of tenure with their current employer (T). Suppose the relationships between wages, education, experience, and tenure for males (M) and females (F) can be represented by the equations
WM = 3 + 0.5E + 0.4X + 0.2T
and
WF = 3 + 0.4E + 0.3X + 0.3T.
On average, E = 4, X =20, and T = 8 for men, while for women the averages are E = 4, X = 14, and T = 4.
A) Find the average wage of men and women. What is the ratio of female to male wages? What is the gap between women and menâs wages in percentage terms?
B) What wage would women earn if they had the same pre-market characteristics as men on average? What would be the ratio of womenâs to menâs wages?
C) Express the amount of current wage discrimination in percentage terms.
Suppose in the analysis that years of tenure are either unmeasurable or unobservable to the researcher. As a result, the analysis produces the following wage equations.
WM = 4.6 + 0.5E + 0.4X
and
WF = 4.2 + 0.4E + 0.3X.
D) Find the average wage of men and women. What is the ratio of female to male wages? What is the gap between women and menâs wages in percentage terms?
E) What wage would women earn if they had the same pre-market characteristics as men on average? What would be the ratio of womenâs to menâs wages?
F) Express the amount of current wage discrimination in percentage terms.
G) Does this (failing to include tenure in the model) overstate or understate the effects of gender discrimination?
