Deck 9: Labor Market Discrimination

Question 1

Which of the following causes a difference in wages but does not necessarily qualify as discrimination?

A)Differences in schooling.
B)Differences in skills.
C)Differences in experience.
D)Differences in language.
E)All of the above lead to differences in wages but none of them necessarily qualifies as discrimination.

Answer 1

E

Question 2

Assume whites and blacks are equally productive. The going wage for whites is $16 per hour, while the going wage for blacks is $10 per hour. Which of the following will characterize the labor market equilibrium when some employers have discriminatory preferences against hiring black workers?

A)All discriminating employers will hire only whites.
B)All firms will earn the same amount of profit regardless of their discriminatory preferences.
C)Any employer with a discrimination coefficient greater than 0.6 will hire only white workers.
D)Any employer with a discrimination coefficient greater than 1.6 will hire only black workers.
E)Any employer with a positive discrimination coefficient will hire only white workers.

Answer 2

C

Question 3

In the standard Becker model of discrimination, each firm is associated with a discrimination coefficient of d > 0 and acts as if the wage paid to blacks is w_B(1+d) where w_B is the actual hourly wage paid to blacks. In equilibrium, a threshold level of d, labeled d*, comes about that sorts firms based on hiring decisions. Which of the following is not an outcome of this model?

A)All firms with d ≠ d* will employ all blacks or all whites.
B)Profits fall as d increases as long as d < d*.
C)In the long run, discrimination will be competed away in a competitive labor market.
D)All discriminating firms hire only white workers.
E)All firms with d > d* earn the same amount of profit.

Answer 3

D

Question 4

Economic theory suggests that discriminating employers will be driven from the marketplace when the output market is competitive. Why?

A)Customers will refuse to purchase from a discriminating employer.
B)Workers will refuse to work for a discriminating employer.
C)The government mandates that the employer not act on his or her desire to discriminate.
D)Discrimination imposes an additional cost on the employer; and high-cost firms are eventually driven out of a competitive output market.
E)A competitive output market requires all workers to be paid the same wage.

Question 5

What is the main theoretical implication regarding the standard employer-based discrimination model?

A)Most firms are discriminatory.
B)Workers don't care if firms are discriminatory.
C)Discrimination is not profitable.
D)Discrimination can only occur if there are exactly two types of labor (e.g., white and black).
E)Discrimination can only occur in competitive labor markets.

Question 6

Customer discrimination results in

A)lower wages for the discriminated-against worker group.
B)a lower output price regardless of who the firm hires.
C)a segregated workforce.
D)lower firm profits.
E)all of these are results of customer discrimination.

Question 7

Over the last 30 years in the United States, the black-white earnings ratio for women has __________ and for men has __________.

A)been relatively flat; steadily increased
B)been relatively flat; steadily decreased
C)steadily increased; steadily increased
D)steadily increased; steadily decreased
E)steadily increased; been relatively flat

Question 8

Which of the following statements regarding gender differences in international labor markets is true?

A)The difference in male and female wages in the United States is less than in almost any other developed country.
B)The difference in male and female wages in the United States is about the average of other developed countries.
C)Men and women are typically employed at the same rate in developed countries.
D)There is a sizeable wage gap between men and women in most developed countries.
E)There is no discernable wage gap between men and women in most developed countries.

Question 9

In a discrimination model, nepotism is best described as

A)a desire to maximize profit regardless of who one hires.
B)a preference to hire a certain type of worker, e.g., a worker of one's same race.
C)a preference to hire an integrated workforce.
D)a desire to advance social causes over maximizing profits.
E)hiring minority workers but then firing them quickly.

Question 10

Which one of the following statements concerning employee discrimination is not true?

A)Employers have no reason to employ a segregated workforce if there is employee discrimination.
B)Employee discrimination does not affect the profitability of firms as long as firms can employ segregated work forces.
C)Discriminating employees act as if their wage is less than it actually is if they are employed by a firm that has an integrated workforce.
D)Workers accept the utility-maximizing job offer even when there is employee discrimination.
E)Employee discrimination will not produce a wage differential between equally skilled black and white workers.

Question 11

There is a restaurant that employs only males to serve guests, only females to tend the bar, and a mix of male and female cooks and dishwashers. The dishwashers and cooks never come in contact with the customers. This hiring pattern is most indicative of

A)employer discrimination.
B)employee discrimination.
C)consumer discrimination.
D)statistical discrimination.
E)racial discrimination.

Question 12

Discrimination in the workforce

A)leads to inefficiency.
B)never leads to higher utility.
C)empirically does not exist.
D)empirically is due primarily to employees and not employers or consumers.
E)empirically is due primarily to consumers and not employers or employees.

Question 13

A firm that discriminates against black labor will certainly

A)hire all white workers.
B)hire all black workers.
C)hire no workers.
D)hire a mix of black and white workers.
E)earn less profit than it could earn if it did not discriminate.

Question 14

The perceived cost of hiring a black worker for an employer who is prejudiced against blacks will exceed

A)the cost of hiring whites.
B)the wage of whites.
C)the wage of blacks.
D)the white-black wage gap.
E)total profit.

Question 15

Compared to hiring a white worker, an employer is $5 less happy when he hires a black worker and is $6 less happy when he hires a Hispanic worker. The firm faces hourly wage rates of $20 for whites, $16 for blacks, and $14 for Hispanics. Which of the following describes the firm's hiring decision?

A)The firm hires all white workers.
B)The firm hires all black workers.
C)The firm hires all Hispanic workers.
D)The firm hires a mixture of white and black workers.
E)The firm hires a mixture of white and Hispanic workers.

Question 16

The Human Resources department at a firm has two job candidates for one position. Both candidates went to the same college, took the same classes and have the same academic record. They both performed well in the interview and said that they see the job as a long-term position. One applicant is male; the other is female. Historically within the firm, women quit their jobs at higher rates than do men. Because of this, the firm fills the position with the male candidate. What kind of discrimination is this?

A)Employee discrimination.
B)Consumer discrimination.
C)Employer discrimination.
D)Statistical discrimination.
E)None of the above.

Question 17

Owners of men's clothing stores traditionally discriminate against males when making hiring decisions because they believe that male customers are more eager to buy clothing from female associates. In reality, however, one's sex does not affect one's sales (i.e., one's sex does not affect one's productivity). Discrimination of this sort throughout the labor market has resulted in clothing stores paying male associates lower wages than they pay female associates. A new men's clothing store enters the industry without these prejudicial beliefs. Which of the following outcomes is not likely to come about?

A)The new store will hire more male associates than the typical existing store.
B)The new store will make greater profit than it would if it would hold similarly biased views.
C)The new store will have lower per-employee labor costs than existing stores.
D)The new store will likely have lower prices than existing stores.
E)The new store will have to hire female associates to compete with its competition.

Question 18

Consider the following data for men and women: If a regression estimates the return to experience for men, β_M, to be 0.25, how much of the average difference in wages can be attributed to differences in work experience and how much can be attributed to discrimination and/or unobservable characteristics?

A)$0.00 to differences in work experience; $2.50 to discrimination/unobservable characteristics.
B)$1.20 to differences in work experience; $1.30 to discrimination/unobservable characteristics.
C)$1.30 to differences in work experience; $1.20 to discrimination/unobservable characteristics.
D)$1.50 to differences in work experience; $1.00 to discrimination/unobservable characteristics.
E)$2.50 to differences in work experience; $0.00 to discrimination/unobservable characteristics.

Question 19

A large employer gives each new hire an aptitude test, which is scored from 1 to 20. Let T be a worker's score on the test. The firm then pays the new worker a wage of w = 0.6T + 0.4G where G is the average test score for the worker's gender-16 for women; 12 for men. How much more is a woman paid than a man when both scored a 10 on the test?

A)$0.20
B)$0.40
C)$0.80
D)$1.60
E)$3.20

Question 20

If one looks at U.S. Census data and finds that the average white salary is $39,000 while the average black salary is $36,000, which of the following is not likely to be a significant cause of this difference given U.S. labor market demographics?

A)Whites are more inclined than blacks to work part-time.
B)Blacks have less education than whites.
C)Labor market discrimination.
D)Whites are more likely than blacks to hold positions in upper management.
E)Whites are more likely than blacks to own their own business.

Question 21

From 1980 to 2012, the female-male wage ratio in the United States

A)held constant at about 0.7.
B)fell steadily from about 1.0 in 1980 to 0.5 in 2012.
C)increased modestly from 0.5 in 1980 to almost 0.6 in 2012.
D)increased substantially from 0.6 in 1980 to almost 0.8 in 2012.
E)increased substantially from 0.4 in 1980 to just under 0.7 in 2012.

Question 22

If one looks at U.S. Census data and finds that the average male salary is $43,000 while the average female salary is $38,000, which of the following is not likely to be a significant cause of this difference given U.S. labor market demographics?

A)Women are more inclined than men to work part-time.
B)Women have less education than men.
C)Women and men prefer different kinds of jobs.
D)Labor market discrimination.
E)On-the-job experience.

Question 23

The female-male wage gap in the United States is associated with women earning between 25 and 30 percent less than men. By all accounts, much of this difference is attributable to

A)differences in education levels.
B)differences in the returns to skill.
C)gender discrimination.
D)differences in labor market experience.
E)differences in productivity.

Question 24

The female-male wage gap in the United States

A)has been increasing over the last 30 years.
B)has been decreasing over the past 30 years.
C)is non-existent.
D)has been decreasing so much that while a raw wage gap still exists it is quite small.
E)will likely change from negative to positive over the next decade.

Question 25

From 1980 to 2012, the black-white wage ratio for males in the United States

A)held constant at about 0.7.
B)fell steadily from about 1.0 in 1980 to 0.5 in 2012.
C)increased modestly from 0.7 in 1980 to about 0.8 in 2012.
D)increased substantially from under 0.5 in 1980 to almost 1.0 in 2012.
E)increased substantially from 0.4 in 1980 to over 0.8 in 2012.

Question 26

When the labor force participation rate falls, the average wage in the economy is likely to increase. Why?

A)Because workers who have the worst wage options are those most likely to leave the labor force.
B)Because educated workers are those most likely to leave the labor force.
C)Because the most experienced workers are those most likely to leave the labor force.
D)Because wages don't take into account salaried workers.
E)Because the U.S. has a negatively skewed wage distribution.

Question 27

The empirical and theoretical results on occupational crowding in the United States suggest that

A)occupational crowding is substantial in the United States, but this should not be thought of as a source of discrimination.
B)occupational crowding is substantial in the United States, and much of this should be thought of as a source of discrimination.
C)occupational crowding is substantial in the United States, but occupational crowding is unrelated to discrimination.
D)there is minimal occupational crowding in the United States, and therefore it cannot be a source of discrimination.
E)there is minimal occupational crowding in the United States, but this is still thought to be an important cause of racial discrimination but not gender discrimination.

Question 28

Consider a color-blind firm that is currently maximizing profits. An affirmative action policy is put in place requiring that all firms in the industry abide by a certain quota. Which of the following will occur?

A)There will be no effect because the firm is currently color-blind.
B)If the quota is already met, the firm will make no changes in its hiring practices.
C)If the firm currently meets the required quota, it will cut costs by adjusting labor to exactly meet the affirmative action requirements.
D)If the firm currently meets the quota, it will begin to lose profits due to the affirmative action requirements.
E)The firm will have to fire some workers.

Question 29

One possible measure of gender discrimination is to look at the difference between the average male wage and the average female wage. This is a poor measure of discrimination for all of the following reasons except:

A)Men and women might have different preferences when it comes to supplying labor.
B)Men and women may differ in the return they receive for their skills.
C)Men and women may differ in their overall level of skill.
D)Men and women may differ in their taste for part-time jobs.
E)Men and women may differ in their willingness to accept risky jobs.

Question 30

Occupational crowding refers to

A)employee-based discrimination.
B)licensure requirements to enter certain occupations.
C)women being intentionally segregated into particular occupations.
D)firms receiving more applications for high-wage job openings than for low-wage job openings.
E)low turnover associated with high-wage occupations.