ePack: Principles of Microeconomics 6th Edition by Gregory Mankiw

Exercise 8

When Alan Greenspan (who would later become chairman of the Federal Reserve) ran an economic consulting firm in the 1960s, he primarily hired female economists. He once told the New York Times , "I always valued men and women equally, and I found that because others did not, good women economists were cheaper than men." Is Greenspan's behavior profit maximizing? Is it admirable or despicable? If more employers were like Greenspan, what would happen to the wage differential between men and women? Why might other economic consulting firms at the time not have followed Greenspan's business strategy?