WORKING

TERMS

• Wages – compensation from a firm to a worker based on time or pieces completed

• Salary – Fixed pay amount irrespective of hours or productivity

• Derived Demand – Firms demand workers for their production value– The more value the worker or the more value the final product

the better paid the worker

CAREER RESEARCH

• Pick 2 or 3 careers• Complete for each

Job National Avg

Wisconsin Avg Outlook Prep Zone

2wire961 pw 469 3118 763

• Line all careers up• Highest to lowest

• Look for trends….

OCCUPATION WAGE DIFFERENCES Supply-Side

•Level of training/Education•Level of Experience•Location•Compensating Differentials – yuck v fun factor

Demand-Side

•Demand for final good

MARKET REASONS FOR WAGE DIFFERENCESLOW WAGES• Low demand for final good, thus low demand for workers

• Plentiful supply of workers

HIGH WAGES• High demand for final good, thus high demand for workers

• Restricted supply of workers

INDIVIDUAL DIFFERENCES

•Education•Experience•Effort – signal?•Negotiation•Preferences

•Winner take All

Alex Rodriguez, 3B$29 mil for 2013

Elian Herrara, 3B$0.5 mil for 2015

HUMAN CAPITAL AND SIGNALS

Grit Ted Talk

WAGE DIFFERENCE EXPLANATIONS1) ARE THERE DIFFERENCES? WORKSHEET

• https://www.youtube.com/watch?v=Scp7s3vqTpw

2) WHY?

• Market• Individual• Structural• Cultural• Exploitation

• So which part is discrimination?

WHEN IS IT WAGE DISCRIMINATION?

SOME DEFINITIONS

• Racism – belief in inherited differences

• Prejudice – pre-judgement based on external characteristics and refusal to accept contrary evidence

• Discrimination – action that treats individuals differently

• Bias – Preference for one group

TYPES OF DISCRIMINATION

•Wage discrimination• Employment discrimination•Occupational discrimination• Statistical discrimination• Institutional discrimination

WAGE DISCRIMINATION

Same job yet different pay

NOT DISCRIMINATION IF REQUIRES DIFFERENT LEVELS OF PREPARATION

EMPLOYMENT DISCRIMINATION

•Last hired & First fired

OCCUPATIONAL DISCRIMINATION

“Men’s” jobs and “Women’s” jobs

IF NO DISCRIMINATION, SHOULD SEE SIMILAR BREAKDOWN IN ANY JOBthe same percentages in any job as in the overall population:

»Women 51%, Men 49%

JOBS BY GENDER

• http://www.stanford.edu/group/scspi/cgi-bin/facts.php

DISCRIMINATION OR FAVORITISM?

WHAT IS THE DIFFERENCE AND DOES IT MATTER?

• Blindspot interview• 4 min radio clip

STATISTICAL DISCRIMINATION

• Lack perfect information about candidates ability and future

MATERNITY LEAVE VS PARENTAL LEAVE

INSTITUTIONAL DISCRIMINATIONDiscrimination of opportunity

Virtuous or Vicious Cycle?Socially reinforced?

NEIGHBORHOOD SEGREGATION:HISTORICAL RESTRICTIONS AND SLIGHT PREFERENCES – SCHNELLING VIDEO

BUT WHAT IF IT ISN’T DISCRIMINATION?»Just a desire for more flexible jobs…

AS YOU LISTEN CONSIDER

» Freakonomics radio, (5 minutes)» Why do women have different work histories than men?» Why do women traditionally choose different jobs? » What about for men and women in the same jobs? What pay difference

would you expect?

WHY IS THE PAY GAP SMALLER FOR YOUNGER WOMEN?

MEASURING DISCRIMINATION

• Compare the population average to the area of interest average• Regression analysis

SO WHY A PAY DIFFERENCE?

• Same education levels – different fields• Same fields – different specialties• Same labor force participation – different hours• Same family size – different time off• But, sometimes discrimination