Question 1

Al and Steve are both reporters at the same newspaper. Al is black and Steve is white. Al earns less than Steve. Which of the following can explain why Al earns less?

Accepted Answer

This choice suggests that although the two reporters have the same level of education, the quality of Al's education was lower, which could potentially explain why he earns less than Steve. The other choices do not provide a clear explanation for the wage gap between the two reporters.

Question 2

Tiffany is a black 21-year-old female, and Danielle is a black 41-year-old female. Both Tiffany and Danielle were accounting majors, and they graduated from the same college with the same GPA - Tiffany in 2013 and Danielle in 1992. Tiffany and Danielle are both auditors at the same accounting firm. Tiffany earns $63,000 a year, and Danielle earns $95,000 a year. Select the best explanation for this wage difference.

Accepted Answer

The answer of Tiffany is a black 21-year-old female, and...

Question 3

Which of these instances would constitute labor-market discrimination? Courtney and Nicole are identical in all of their labor-market characteristics except that Courtney earns a higher salary than Nicole because

Accepted Answer

Differential treatment based on age is a form of labor-market discrimination, as it is prohibited by the Age Discrimination in Employment Act (ADEA). The other options do not constitute discrimination as they are based on factors such as physical appearance, work schedule, and training, which are considered legitimate grounds for differential treatment in the labor market.

Question 4

People who grew up in the western part of Aquilonia have an accent distinct from people who grew up in the eastern part of the country. People from the west also receive lower wages than people from the east. From this information alone, we can conclude that it is possible that

Accepted Answer

All three options are possible explanations for the observed differences. Discrimination could explain the wage differential between east and west if employers in the east have a preference for workers from their own region. Compensating differentials could explain the wage differential if working in the east has some non-monetary advantage (e.g. better working conditions or job opportunities) that compensates for the lower wage. Lower levels of human capital in the west could also explain the wage differential if workers there have less education or training than those from the east. Therefore, all three options could be correct.

Question 5

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Accepted Answer

The answer of Allen and Ellen both work at Burger...

Question 6

John is an Asian 23-year-old male, and Ken is an Asian 43-year-old male. Both John and Ken are economics majors, and they graduated from the same college with the same GPA - John in 2006 and Ken in 1986. John and Ken are both financial advisers at the same brokerage firm. John earns $52,000 a year, and Ken earns $88,000 a year. Select the best explanation for this wage difference.

Accepted Answer

The given information suggests that John and Ken have the same human capital, i.e., same major, same college, and same GPA. However, Ken has more work experience than John, which could explain his higher earnings. This choice implies that the wage difference is not due to discrimination based on age or other factors.

Question 7

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

Accepted Answer

One of the key challenges in calculating the true amount of discrimination in the labor market is measuring productivity differences between workers. Discrimination may not always be evident in wage differentials alone, as it may also be manifested through differences in opportunities or promotions that impact productivity and thus, wages. Therefore, it is important to consider factors beyond simple wage differentials when assessing discrimination in the labor market.

Question 8

Empirical work that does not account for differences in the productivity of workers

Accepted Answer

Failing to account for differences in productivity of workers can lead to misinterpretation of wage differentials and erroneously attributing them to discrimination. Correcting for productivity differences is important in providing accurate evidence of labor market discrimination. Therefore, empirical work that does not account for differences in productivity is not superior to empirical work that does.

Question 9

Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because

Accepted Answer

Differences in years of work experience likely lead to productivity differences between men and women. While discrimination may still be a contributing factor to the gender wage gap, it is not the sole explanation. Efficiency wages, which are wages paid above market wages to increase worker productivity and reduce turnover, could also play a role. Additionally, compensating differentials, where workers are paid extra to compensate for a less desirable job attribute, may lead to higher wages for women in some cases.

Question 10

Which of these instances would constitute labor-market discrimination? Henry receives a higher wage than Ryan. Henry and Ryan are identical in all of their labor-market characteristics except that

Accepted Answer

The only instance that could constitute labor-market discrimination is if Henry receives a higher wage than Ryan based on their race. This would be an unfair and discriminatory practice. The other options (A, B, and D) are all legitimate reasons for differences in wages based on education, experience, and job performance.

Question 11

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Accepted Answer

Worker A is offered a higher salary based on a non-job-related characteristic (gender and age), which is an example of labor-market discrimination.

Question 12

Mary and Mike are twins who attended grammar school through college together. Both twins got jobs in the same department of an accounting firm. They both work equally hard and have received similar performance reviews. Mary earns $62,000 a year, and Mike earns $80,000 a year. Select the best explanation for this wage difference.

Accepted Answer

The most likely explanation for the wage difference is that Mary has been discriminated against because she is female. Despite both twins working equally hard and receiving similar performance reviews, Mike earns significantly more than Mary. This wage difference cannot be explained by differences in human capital. Therefore, discrimination based on gender is the most likely explanation.

Question 13

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Accepted Answer

Offering a higher salary to worker A because they are male and worker B is female is an example of labor-market discrimination based on gender.

Question 14

Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.

Accepted Answer

It is possible that Harry has more experience or better qualifications as a plumber, leading to him earning more despite both being the same age and working in the same field. Discrimination cannot be assumed without further evidence.

Question 15

In the country of Freedonia, men and women have the same level of education and choose different forms of work in the same proportions. The only real difference is that men typically stay home to raise young children, returning to the work force after their children enter elementary school. If no discrimination exists, then we would expect that, on average,

Accepted Answer

The answer of In the country of Freedonia, men and...

Question 16

Marcia is a white 23-year-old female, and Joan is a black 23-year-old female. Both Marcia and Joan were economics majors, and they graduated from the same college in the same year with the same GPA. Marcia and Joan both got identical jobs at a brokerage firm after graduating from college. They both work equally hard. Marcia earns $38,000 a year, and Joan earns $30,000 a year. Select the best explanation for this wage difference.

Accepted Answer

The fact that Marcia and Joan have the same qualifications and perform equally at work but are paid different wages suggests that there may be discrimination based on race in the workplace. Joan's lower wage could potentially be due to racial bias in hiring, promotions, or salary decisions.

Question 17

George and Susan work at the same brewery. George works in advertising. Susan works as a forewoman in the bottling plant. George is paid more than Susan.

Accepted Answer

The statement suggests that George might be paid more due to his superior performance reviews. This does not suggest discrimination based on gender, but rather a recognition of individual job performance. The other options do not provide enough evidence to support the claim of discrimination.

Question 18

Differences in human capital are likely to

Accepted Answer

Differences in human capital, such as education and experience, can help explain differences in average wage rates across age classifications. However, they cannot explain all differences in wage rates across gender classifications, as gender discrimination and bias can still exist.

Question 19

Scenario 19-3
In the small town of Hamilton, Montana, there is a local hardware store called Eddy's Hardware. There are only two types of workers who apply for jobs at Eddy's Hardware: cowboys and farm boys. Local politicians have received numerous complaints that Eddy's Hardware is practicing wage discrimination against farm boys. Eddy's Hardware denies the complaint and says the store is only trying to maximize profit.
-Refer to Scenario 19-3. Which of the following statements would strengthen the discrimination complaint against Eddy's Hardware?

Accepted Answer

If cowboys call in sick to work more often than farm boys, yet farm boys are still paid less, it suggests that the wage disparity cannot be justified by reliability or attendance, strengthening the discrimination complaint.

Question 20

Scenario 19-3
In the small town of Hamilton, Montana, there is a local hardware store called Eddy's Hardware. There are only two types of workers who apply for jobs at Eddy's Hardware: cowboys and farm boys. Local politicians have received numerous complaints that Eddy's Hardware is practicing wage discrimination against farm boys. Eddy's Hardware denies the complaint and says the store is only trying to maximize profit.
-Refer to Scenario 19-3. Which of the following statements would weaken the discrimination complaint against Eddy's Hardware?

Accepted Answer

If farm boys are generally less educated than cowboys in the field of hardware, then it is possible that they are not qualified for the same positions as cowboys and may therefore be paid less due to their lack of experience or knowledge. This would weaken the discrimination complaint against Eddy's Hardware as it suggests that the wage disparity may not be based on discrimination but rather on qualifications and experience. Choices A and B would not necessarily weaken the discrimination complaint as they suggest that farm boys are more productive or work longer hours, which does not address the issue of unequal pay.

Quiz 19: Earnings and Discrimination

Al and Steve are both reporters at the same newspaper. Al is black and Steve is white. Al earns less than Steve. Which of the following can explain why Al earns less?

Which of these instances would constitute labor-market discrimination? Courtney and Nicole are identical in all of their labor-market characteristics except that Courtney earns a higher salary than Nicole because

People who grew up in the western part of Aquilonia have an accent distinct from people who grew up in the eastern part of the country. People from the west also receive lower wages than people from the east. From this information alone, we can conclude that it is possible that

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

Empirical work that does not account for differences in the productivity of workers

Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because

Which of these instances would constitute labor-market discrimination? Henry receives a higher wage than Ryan. Henry and Ryan are identical in all of their labor-market characteristics except that

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.

George and Susan work at the same brewery. George works in advertising. Susan works as a forewoman in the bottling plant. George is paid more than Susan.

Differences in human capital are likely to