Discrimination and MaleFemale
Earnings Differential
Chapter 12
Benjamin, Gunderson and Riddell
Main Questions
 How
can otherwise equally productive
men and women be paid different wages
in a competitive labour market?
 What Methods are used to measure the
extent of discrimination in the labour
market?
 How much discrimination exists in the
Canadian labour market?
11/17/99
Economics 340
2
Main Questions (cont’d)
 Is
there evidence of discrimination against
other groups?
 What policies have been adopted to
address the effects of discrimination?
Which policies have been effective?
11/17/99
Economics 340
3
Overview
 There
is some debate as to whether
discrimination is an economic or a social
phenomenon.
 Discrimination can occur in other markets
besides the labour market.
 We will look at gender discrimination but
the principles can apply to other forms of
discrimination as well.
11/17/99
Economics 340
4
Reasons for Discrimination
 Discrimination
may occur against females
because males have a preference for
buying from or working with other males.
 It may also occur due to erroneous
information about the productivity of
females.
 Males may also discriminate for reasons of
job security.
11/17/99
Economics 340
5
Sources of Discrimination
 Employers
may discriminate against
females through hiring or wage rate
practices.
 Co-workers may discriminate against
females by not giving them the cooperation that all workers need.
 Customers may discriminate against
females by not buying from them.
11/17/99
Economics 340
6
Theories of Labour Market
Discrimination
 Demand
theories say lower demand for
female labour reduces wages.
 Supply theories say discrimination is
based on the supply of female labour
either in crowding or dual labour markets.
 Non-competitive theories include such
things as imperfect information, queuing
theories and deliberate discrimination.
11/17/99
Economics 340
7
Productivity Differences
 Much
of the perceived differences in
productivity can be the result of systemic
discrimination.
 Traditional roles give females more
responsibility for household duties.
 One important thing to remember is that
discrimination judges individuals by group
actions.
11/17/99
Economics 340
8
Feminist Perspectives
 There
is a feminist perspective (not
necessarily shared by all feminists) which
blames the general theories of economics
for the male bias.
 Male domination in economics and the
non-personal methods used in economics
lead to the stereotyping of females.
11/17/99
Economics 340
9
Evidence on Male-Female
Earnings Differentials
 Females
tend to earn 60 to 65% of male
wages, on average.
 This is closer to 70% for full time full year
workers and the gap has been slowly
closing since the 1960s.
 Youth and education will increase the
percentage for females.
11/17/99
Economics 340
10
Empirical Results on
Male-Female Differentials
 There
is a portion of the wage rate
differential which can be explained by
nothing other than wage rate
discrimination.
 Discrimination may be largely due to
factors outside of the labour market
(systemic discrimination).
 Uneven distribution between occupations
is the largest labour market factor.
11/17/99
Economics 340
11
Conventional Equal Pay
Legislation
 Equal
pay for the same job within the
same company.
 This is a “motherhood statement” and is
necessary though not very effective.
 It only applies to the most blatant of
discriminators within a single company.
 Employers define the jobs for all
employees.
11/17/99
Economics 340
12
Pay Equity
 Employers
must have equal pay for work
of equal value.
 This is still within the same employer and it
is the employer who has a large say as to
the value of employment.
 This is very difficult to enforce as being
witnessed by the federal public service
settlement.
11/17/99
Economics 340
13
Equal Employment Opportunity
 This
means that employers must
objectively consider all applicants for
employment.
 Once again this is a motherhood
statement and can only be effective
against the most blatant discriminators.
 It is often used as a “ad” to promote the
employer, i.e. “We are an equal
opportunity employer.”
11/17/99
Economics 340
14
Employment Equity

This is a controversial policy which is often
referred to as “reverse discrimination”.
 This must be performed over a relatively long
period of time so the employer is not forced to
accept unqualified employees.
 One of the real dangers with this type of policy is
that the employer may perpetuate discrimination
by hiring someone who will not succeed.
11/17/99
Economics 340
15