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Exam 19: Earnings and Discrimination

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Question 101

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The ownership of human capital

A) is typically embodied in related physical capital.
B) may be subject to government restrictions on transferability.
C) is not easily transferable.
D) often leads to lower wages.

E) A) and B)
F) C) and D)

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Question 102

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One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs, especially for those workers who deal with the public.

A) True
B) False

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Question 103

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When comparing average wages for black and white men in the United States, wages paid to black men have been about 20 percent less than those paid to white men.

Which of the following is an example of a compensating differential?

In a labor market free from discrimination, wages for workers that are employed by the same company will still differ.

Scenario 19-1 Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp. -Refer to Scenario 19-1. Ferris is carefully considering the options that each recruiter presents. On the basis of knowledge obtained in his economics class, Ferris concludes that

If an older worker earns less than a younger worker for the same job, we have proof of age discrimination.

Scenario 19-7 ​ Suppose that in the competitive market for auto repair, firms prefer to hire men rather than women. Assume that the women applying for positions have the same skills, experience, and work ethic as the men. As a result of this discrimination, the demand for women is lower than it otherwise would be. -Refer to Scenario 19-7. If the firms in this market are profit-maximizers and customers do not care if a woman or a man works on their car, what will likely happen?

Table 19-1 $\begin{array} { | l | l | l | } \hline& \mathbf { 1 9 7 5 } & \mathbf { 2 0 1 1 }\\ \hline \text { Men } & \\\hline \text { High school, no college } & \$ 48,720 &\$46,038 \\\hline \text { College graduates } & \$ 69,146 & \$ 80,508 \\\hline \text { Percent extra for college grads } & + 42 \% & + 75 \% \\\hline & & \\\hline \text { Women } & & \\\hline \text { High school, no college } & \$ 28,006 & \$ 32,249 \\\hline \text { College graduates } & \$ 37,804 & \$ 58,229 \\\hline \text { Percent extra for college grads } & + 35 \% & + 81 \% \\\hline\end{array}$ Source: US Census Bureau and Mankiw's calculations -Refer to Table 19-1. What conclusion can you draw about the changes in the gaps in earnings between skilled and unskilled workers between 1975 and 2011?

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

The theory of education that states firms use educational attainment as a way of sorting between high-ability and low-ability workers is called

Unions are often able to sustain wages above the equilibrium wage because they can threaten to

If there is systematic discrimination against a group of workers, then the wage paid to those workers likely will be

Wages of doctors tend to be higher than wages of dental hygienists. Which of the following is not a compensating differential explaining the difference in wages?

A manager of a small firm who believes in the signaling theory of education would encourage her employees to obtain additional education to raise their on-the-job productivity.

In the presence of discrimination by customers,

Figure 19-8 ​ ​ -Refer to Figure 19-8. The figure shows labor demand and labor supply in a non-unionized labor market. If the current labor demand is D1 and the current labor supply is S1, what is the equilibrium wage and quantity of labor?

Chloe and Adrian went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Adrian's employer is not a good business manager, and the sales manager lost a major deal. Because of the decrease in profits, the employees did not receive raises last year. Chloe's employer is a savvy business manager and the sales manager is experienced and works hard. If Chloe has higher earnings than Adrian, the difference is most likely a function of

Experimental evidence indicates women choose less competitive environments than men.

Many economists believe that competitive, market economies provide a natural antidote to employer discrimination known as the