Labor%20Market%20Discrimination

1
Labor Market Discrimination

• Discrimination
• By Employer, Customer, and Employee

2
Labor 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.

3
Feed 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

4
Feed 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

5
Subtle 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.

6
Subtle 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".

7
Glass 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

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Glass 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

9
Glass 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

10
Glass 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

11
Glass 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

12
Glass 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

13
Glass 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

14
Measuring 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

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Measuring DiscriminationGender Wage Ratio
16
The 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

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The 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.

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The Overcrowding Model

• At first assume that both jobs on average pay the
  same wage.
• Under this circumstances then we would have the
  following graph

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The Overcrowding Model
S
S


w
D
D
L
L
F type Jobs
M type Jobs
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The 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

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The 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

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The Overcrowding Model
S
S


wM
w
wF
D
D
L
LF
LM
L
F type Jobs
M type Jobs
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The 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) .

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Models 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

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Gary 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

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Gary Becker

• The normal assumption that workers will be paid
• MPL w
• Will then become
• MPL wW
• MPL wB(1 d)
• Where dgt0

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Gary Becker

• Hence, wW wB(1 d)
• or wm wf(1 d)
• Where dgt0
• or
• wf / wm 1/(1 d)

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EMPLOYEE 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
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THE DEMAND FOR WOMEN WORKERS, EMPLOYERS A TO E
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WOMENS WAGES WHEN EMPLOYERS DISCRIMINATION
COEFFICIENTS DIFFER
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MARKET EQUILIBRIUM BEFORE AND AFTER ENTRY
1
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Gary 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

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Statistical 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

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Customer 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

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Customer 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.

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Employee 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
  

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Employee 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

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Statistical 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

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STATISTICAL DISCRIMINATION BASED ON DIFFERENT
DISTRIBUTIONS OF LABOR FORCE ATTACHMENT FOR MEN
AND WOMEN
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STATISTICAL DISCRIMINATION WHEN THE DISTRIBUTION
BY GENDER ARE VERY SIMILAR
41
Human 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)

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THE HUMAN CAPITAL EXPLANATION OF OCCUPATIONAL
SEGREGATION BY GENDER-THE ROLE OF WAGE PENALTIES
TO PERIODS OF NONWORK
43
Institutional 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

44
Institutional Models

• There are primarily there Institutional models
  (which can work separately or in conjunction)
• The internal Labor Market
• Primary and Secondary Jobs
• Feedback Effects

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Internal 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

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Internal Labor Market
Wages ()
Firm-Specific Training
Job Ladder
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Primary 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

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Internal Labor Market
Wages ()
Primary
Secondary
Job Ladder
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Feedback 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

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Feedback Effects
Gender Division of Labor in the family
Gender Differences in Labor Market outcomes