Title: Labor Market Discrimination
1Labor Market Discrimination
- Discrimination
- By Employer, Customer, and Employee
2Labor 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.
3Feed 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
4Feed 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
5Subtle 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.
6Subtle 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".
7Glass 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
8Glass 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
9Glass 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
10Glass 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
11Glass 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
12Glass 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
13Glass 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
14Measuring 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
15Measuring DiscriminationGender Wage Ratio
16The 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
17The 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.
18The Overcrowding Model
- At first assume that both jobs on average pay the
same wage. - Under this circumstances then we would have the
following graph
19The Overcrowding Model
S
S
w
D
D
L
L
F type Jobs
M type Jobs
20The 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
21The 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
22The Overcrowding Model
S
S
wM
w
wF
D
D
L
LF
LM
L
F type Jobs
M type Jobs
23The 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. wMgtwF) - 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) .
24Models of Labor Market Discrimination
- Tastes for Discrimination
- Gary Becker conceptualized discrimination as a
personal prejudice - UU(?,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
25Gary Becker
- He then assumed that
- ?U/?? gt 0
- ?U/?W gt 0
- ?U/?B lt 0
- Assuming that both White and Black workers are
homogenous
26Gary Becker
- The normal assumption that workers will be paid
- MPL w
- Will then become
- MPL wW
- MPL wB(1 d)
- Where dgt0
27Gary Becker
- Hence, wW wB(1 d)
- or wm wf(1 d)
- Where dgt0
- or
- wf / wm 1/(1 d)
28EMPLOYEE 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
29THE DEMAND FOR WOMEN WORKERS, EMPLOYERS A TO E
30WOMENS WAGES WHEN EMPLOYERS DISCRIMINATION
COEFFICIENTS DIFFER
31MARKET EQUILIBRIUM BEFORE AND AFTER ENTRY
1
32Gary 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
33Statistical 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
34Customer 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
35Customer 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.
36Employee Discrimination
- If m type worker does not like working alongside
with f type worker than - wm 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
37Employee 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 - w1m w2m(1 - d)
- such that
- w1m lt w2m
38Statistical 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
39STATISTICAL DISCRIMINATION BASED ON DIFFERENT
DISTRIBUTIONS OF LABOR FORCE ATTACHMENT FOR MEN
AND WOMEN
40STATISTICAL DISCRIMINATION WHEN THE DISTRIBUTION
BY GENDER ARE VERY SIMILAR
41Human 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)
42THE HUMAN CAPITAL EXPLANATION OF OCCUPATIONAL
SEGREGATION BY GENDER-THE ROLE OF WAGE PENALTIES
TO PERIODS OF NONWORK
43Institutional 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
44Institutional Models
- There are primarily there Institutional models
(which can work separately or in conjunction) - The internal Labor Market
- Primary and Secondary Jobs
- Feedback Effects
45Internal 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
46Internal Labor Market
Wages ()
Firm-Specific Training
Job Ladder
47Primary 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
48Internal Labor Market
Wages ()
Primary
Secondary
Job Ladder
49Feedback 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
50Feedback Effects
Gender Division of Labor in the family
Gender Differences in Labor Market outcomes