Part 3 Short Answers 1) (8 points) Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given by: W= 250 + 55s and W= = 200 + 40s. On average, men have 12 years of schooling and women have 13 years of schooling. a) (2 points) What is the average male-female wage differential in the labor market? wm = 250 + 55 (12) = $910 wf = 200 + 40 (13) = $720 average male female wage differential = wm - mf = $190 b) (4 points) Using the Oaxaca decomposition, calculate how much (in dollars and in percentages) of this wage differential maybe due to schooling differences vs discrimination? c) (2 points) Show the decomposition on graph. Label your graph clearly and show which part of the wage differential is due to schooling differences and which part can be attributed to discrimination