Question 1

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.
A)Because the male worker earns a higher salary than the female worker, the employer must be discriminating against women.
B)If George has better performance reviews than Susan, the company might be rewarding George for his high productivity.
C)If forepersons at bottling plants typically earn more than employees in the advertising department, then the brewery must be discriminating against women.
D)George might be earning more because he works the day shift while Susan works the night shift.

Accepted Answer

The information provided does not give enough evidence to conclude discrimination against women. It is possible that George has better performance and productivity, which could explain his higher salary. The comparison between the salaries of forepersons and advertising employees is irrelevant since we do not know their specific job responsibilities or qualifications. The shift difference could also be a factor in the pay difference. Therefore, the best choice is B because it considers factors that may explain the salary difference without assuming discrimination.

Question 2

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
A)Courtney is beautiful and Nicole is not.
B)Courtney is 40 years old and Nicole is 60 years old.
C)Courtney works the night shift and Nicole works the day shift.
D)Courtney attended on the job-training seminars which allows her to do tasks Nicole is not qualified for.

Accepted Answer

The only instance that constitutes labor-market discrimination is when two individuals are identical in all of their labor-market characteristics except for a characteristic that has no bearing on job performance, such as age. In this case, Courtney is earning more simply because she is younger, which is discriminatory. The other options - beauty, work shift, and training seminars - could potentially impact job performance and therefore would not be considered discrimination.

Question 3

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.
A)Mary has less human capital than Mike.
B)Mary has more human capital than Mike.
C)Mike has been discriminated against because he is male.
D)Mary has been discriminated against because she is female.

Accepted Answer

Mary and Mike are twins who attended the same school and received similar performance reviews. The only difference in their earnings is their gender, suggesting that Mary has been discriminated against due to her being female.

Question 4

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
A)has more experience.
B)is willing to travel two weeks out of each month, whereas worker B will not travel more than three nights a month.
C)has a special certification that directly relates to her job, whereas worker B does not.
D)is a young blonde woman, whereas worker B is an older, gray-haired man.

Accepted Answer

The reason for offering a higher salary to worker A is not based on any relevant qualifications or characteristics that affect job performance, but on an irrelevant characteristic such as gender and age. This is an example of labor-market discrimination.

Question 5

Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.
A)Dan is being discriminated against.
B)Harry might be discriminated against if he has more experience as a plumber.
C)Harry might be discriminated against if he has less training as a plumber.
D)Harry might be discriminated against if he works the day shift and Dan works the night shift.

Accepted Answer

It is possible that Harry has more experience or training as a plumber which could explain why he earns more than Dan. Without additional information, it is not appropriate to assume that Dan is being discriminated against solely based on their race.

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.
A)John has more human capital than Ken.
B)John has less human capital than Ken.
C)John has been discriminated against because he is young.
D)Ken has been discriminated against because he is old.

Accepted Answer

The fact that John and Ken have the same GPA suggests that they have the same amount of human capital (i.e. education and skills). Therefore, the significant wage difference can be attributed to other factors such as Ken's greater work experience and seniority within the company.

Question 7

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?
A)Farm boys are more productive than cowboys.
B)Farm boys work longer hours than cowboys and their effort is greater.
C)Farm boys are generally less educated than cowboys in the field of hardware.
D)All of the above would weaken the discrimination complaint.

Accepted Answer

Option C weakens the discrimination complaint because it suggests that the wage differential may be due to a difference in education and specialization in the field, rather than discrimination based on personal characteristics such as being a farm boy or cowboy. Options A and B do not directly address the issue of discrimination and could potentially support the discrimination complaint. Option D is incorrect as all options do not weaken the discrimination complaint.

Question 8

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
A)has more education.
B)is willing to work the night shift.
C)is a man, whereas worker B is a woman.
D)has better performance reviews, indicating higher productivity.

Accepted Answer

Worker A is being offered a higher salary solely because of their gender, which is an example of labor-market discrimination. Education, willingness to work the night shift, and better performance reviews are all non-discriminatory factors that could justify a salary difference.

Question 9

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
A)Henry is a college graduate, and Ryan has only a high school diploma.
B)Henry has 10 years of experience at his job, whereas Ryan has only five years of experience.
C)Henry is white and Ryan is Black.
D)by objective measures Henry consistently outperforms Ryan.

Accepted Answer

The only characteristic that differs between Henry and Ryan is race. If Ryan is receiving a lower wage solely based on his race, that would constitute labor-market discrimination.

Question 10

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
A)discrimination against people from the west exists.
B)people from the east receive compensating differentials.
C)people from the west have lower levels of human capital.
D)All of the above could be correct.

Accepted Answer

All of the given options could be correct. Discrimination against people from the west based on their accent or origin could exist, leading to lower wages for them. On the other hand, people from the east may receive compensating differentials, like higher wages, for their higher levels of skills or education. It is also possible that people from the west have lower levels of human capital, such as education or training, that make them less competitive in the labor market compared to people from the east. Therefore, without further information, all the options are equally plausible.

Question 11

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.
A)Marcia has less human capital than Joan.
B)Marcia receives a compensating wage differential that Joan does not.
C)Joan has been discriminated against because she is black.
D)Marcia has been discriminated against because she is white.

Accepted Answer

Joan has been discriminated against because she is black. This is evident because both Marcia and Joan have the same educational background and work equally hard, but Marcia earns more. The only distinguishing factor between them is their race, which suggests that Joan is being paid less due to discrimination.

Question 12

If men, on average, earn 20 percent more than women in a particular occupation,
A)this is clear evidence of discrimination.
B)some of this differential could be due to differences in educational levels.
C)some of this differential could be due to differences in human capital.
D)Both b and c are correct.

Accepted Answer

The wage gap between men and women in a particular occupation can be caused by differences in educational levels, work experience, and other aspects of human capital. However, it is also possible that discrimination plays a role in the wage differential. Therefore, both options B and C are correct.

Question 13

Differences in human capital are likely to
A)be unrelated to wage rate differences across gender classifications, since both men and women are required to complete requirements for a high school diploma.
B)be most helpful in explaining age discrimination, but unhelpful in explaining race discrimination.
C)explain some of the differences in average wage rates across age classifications.
D)explain all of the differences in average wage rates across gender classifications.

Accepted Answer

Differences in human capital, such as education and experience, are often cited as reasons for differences in average wage rates across age classifications. Other factors like job skills, industry, and job demand can also contribute to wage differences. However, differences in human capital alone do not explain all of the wage gaps observed across gender or racial classifications.

Question 14

Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because
A)some of the wage gap is explained by efficiency wages.
B)differences in years of work experience likely lead to productivity differences between men and women.
C)compensating differentials usually lead to higher wages for women.
D)All of the above are correct.

Accepted Answer

Differences in years of work experience likely lead to productivity differences between men and women. While discrimination may still exist in some cases, other factors such as differences in education, job tenure, and career choices also contribute to the gender wage gap.

Question 15

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.
A)Tiffany has more human capital than Danielle.
B)Tiffany has less human capital than Danielle.
C)Tiffany has been discriminated against because she is young.
D)Danielle has been discriminated against because she is old.

Accepted Answer

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

Question 16

Empirical work that does not account for differences in the productivity of workers
A)is unlikely to find evidence of wage differentials.
B)can provide strong evidence of labor market discrimination.
C)is likely to misinterpret apparent evidence of labor market discrimination.
D)is accepted as superior to empirical work that does correct for differences in productivity of workers.

Accepted Answer

Ignoring differences in productivity can lead to the misinterpretation of wage differentials as evidence of discrimination, when in fact they may be based on productivity differences.

Question 17

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,
A)women would earn less than men.
B)women would earn more than men.
C)men and women would earn the same wage.
D)wage differences between men and women would be due to differences in beauty.

Accepted Answer

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

Question 18

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?
A)The manager discriminates against women.
B)Allen works the undesirable early morning shift.
C)Allen has more experience and so more human capital.
D)All of the above could be correct.

Accepted Answer

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

Question 19

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?
A)Although both have BA's in Journalism, Al's K-12 and college education were of a lower quality than Steve's.
B)Al has greater experience.
C)Al works the night shift and Steve works the day shift.
D)Al writes editorials which are very popular with customers, while Steve covers the police report which fewer subscribers read.

Accepted Answer

Education and quality of education can play a significant role in determining salary.

Question 20

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is
A)the inability to calculate wage differentials.
B)the inability to see changes in the wage differentials over a period of time.
C)the difficulty in measuring productivity differences between workers.
D)the difficulty in measuring female labor-force participation.

Accepted Answer

Discrimination can be difficult to measure because differences in productivity between workers can be attributed to factors other than prejudice, such as differences in education or experience. Therefore, it is difficult to determine whether wage differentials are the result of discrimination or simply reflect differences in productivity.

Quiz 19: Earnings and Discrimination

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.

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

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.

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 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

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

If men, on average, earn 20 percent more than women in a particular occupation,

Differences in human capital are likely to

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

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

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?

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?

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