Assume that all workers are equally productive, but the wage rate for men is $25, compared to $23 for women. An employer who employs only male workers must have a discrimination coefficient of

Question

Quizplus · Accepted Answer

The discrimination coefficient measures the cost an employer is willing to pay to discriminate. If the employer pays men $25 instead of hiring women for $23, despite equal productivity, the extra $2 paid is the cost of discrimination, indicating a preference strong enough to pay more than the economic cost of hiring women. Thus, the coefficient must be more than $2.

Assume That All Workers Are Equally Productive, but the Wage