1. Explain what is meant by the coefficient of employment discrimination, de. Suppose that a particular...

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1. Explain what is meant by the coefficient of employment discrimination, de. Suppose that a particular employer's coefficient of discrimination is de 9: what is the effective cost to this firm of spending an additional $1 on minority workers? 2. Under statistical discrimination earnings may depend on a worker's group affiliation such as race or gender. Does the use of this information constitute prejudicial discrimination? Explain how beliefs concerning the relative productivities of majority and minority workers may drive a self-fulfilling prophecy cycle. 3. Suppose that the earnings of Majority and minority workers depend on their (material) productivities, q: WM 100+4q and w 50+ 4-q, respectively. (a) If the productivities of the average M-worker and m-worker are, respectively, 7, 15 and 10 what are their average earnings and what is the gap between them? (b) Use the Oaxaca transformation to characterize the extent of wage discrimination. 4. The Becker model: Suppose that the labour market is competitive and there are 1000 majority workers (M) and 1000 minority workers (m) with vertical labour supply curves. Both groups have EMP - $180/day and there are V-2500 job slots to fill. As in Lecture notes, the CDF V(5) indicates the % of jobs for which de <8 (with 8 varying between zero and max). (a) Characterise the benchmark model (without discrimination). (b) Let V(6) 500+ 1008: derive the number of unprejudiced jobs advertised, and the highest and median coefficients of employer discrimination. (c) Derive equilibrium wages for M and m workers and coefficient of market wage discrimination 0. (d) Derive the marginal firm's level of prejudice and compare with the median. 1. Explain what is meant by the coefficient of employment discrimination, de. Suppose that a particular employer's coefficient of discrimination is de 9: what is the effective cost to this firm of spending an additional $1 on minority workers? 2. Under statistical discrimination earnings may depend on a worker's group affiliation such as race or gender. Does the use of this information constitute prejudicial discrimination? Explain how beliefs concerning the relative productivities of majority and minority workers may drive a self-fulfilling prophecy cycle. 3. Suppose that the earnings of Majority and minority workers depend on their (material) productivities, q: WM 100+4q and w 50+ 4-q, respectively. (a) If the productivities of the average M-worker and m-worker are, respectively, 7, 15 and 10 what are their average earnings and what is the gap between them? (b) Use the Oaxaca transformation to characterize the extent of wage discrimination. 4. The Becker model: Suppose that the labour market is competitive and there are 1000 majority workers (M) and 1000 minority workers (m) with vertical labour supply curves. Both groups have EMP - $180/day and there are V-2500 job slots to fill. As in Lecture notes, the CDF V(5) indicates the % of jobs for which de <8 (with 8 varying between zero and max). (a) Characterise the benchmark model (without discrimination). (b) Let V(6) 500+ 1008: derive the number of unprejudiced jobs advertised, and the highest and median coefficients of employer discrimination. (c) Derive equilibrium wages for M and m workers and coefficient of market wage discrimination 0. (d) Derive the marginal firm's level of prejudice and compare with the median.