6. Suppose there are two types of restaurant workers high-skill chefs and low-skill servers. There are 1000 males and 1000 females in the labour force, and each group has an identical distribution between high- skill and low-skill workers. The two diagrams below show an initial outcome in each labour market. Assume there is no discrimination based on gender.

a) As shown in the figures, the wage paid to chefs is higher than the wage paid to servers. What explains this wage differential?

b) Do men earn more or less, on average, than women? Explain.

Both have the same distributions, as indicated by the facts provided in the question, and it is made clear that there is no discrimination. Therefore, both may make more money overall. (Although the maximum and minimum wages may differ, we may still argue that they are equal on average.) This is because the wage differential is based solely on skill and role, not gender

c) Now suppose that employers begin to discriminate against female workers and hire only males as chefs. Show in the diagram what happens in each labour market.

d) In the situation in part (c), what happens to the wage differential between chefs and servers? What happens to the wage differential between males and females?

e) In the absence of any government intervention, explain the forces that we expect might eliminate this discrimination over time.