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

Question

Quizplus · Accepted Answer

The most likely explanation for the wage difference is that Mike has been discriminated against because he is black. The fact that Joe and Mike graduated from the same college in the same year with the same GPA and work equally hard suggests that their human capital is roughly equivalent. Therefore, discrimination is a more plausible explanation than differences in human capital.

Joe Is a White 23-Year-Old Male,and Mike Is a Black