One measure of wage discrimination, say between men and women, is the portion of the gender wage gap that is explained by differences in the payoffs to productive characteristics. After analyzing wage data (using regression analysis), you obtain the following expressions for male and female wages:

Wf=2+0.3Educ+0.2Exp+0.4Ten

Wm=3+0.4Educ+0.3Exp+0.4Ten

where Wis the hourly wage, Educis years of education, Expis total years of experience, and Tenis tenure (years worked) with one's current employer.Furthermore, the average female wage Wfis $12/hour, the average male wage Wmis $18/hour, the average Educfor males is 16 years, the average Experiencefor males is 18 years, and the average ten for males is 7 years.

What is the gender wage gap between males and females?

a.

$6/hr

b.

$3.25/hr

c.

$2.50/hr

d.

$1.75/hr

Which of the following is FALSE?

a.

Earningsdifferentialscausedbydifferencesinproductivecharacteristicsareknown as "premarket."

b.

Anunexplainedwagedifferential reflects pure market discrimination.

c.

Whenproductivecharacteristicsarecontrolledinananalysisofearningsdifferentials,theyaccountfornearly allof thegenderwagedifferential.

d.

Incomedisparitiesbetweenmenandwomenmayhavetheirrootsindifferentincentivestoacquireproductive characteristics.

Statistical discrimination arises because

a.

personal characteristics of job applicants are known precisely.

b.

Employers are not maximizing profits.

c.

There are differences in mean abilities across groups.

d.

There are difficulties in estimating the amount of discrimination precisely.