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2. (15 marks) Consider a labour market where a worker's wage is a function of their years of education past the compulsory level (ED), work experience (EXP), and occupation (OC). Let the occupational variable take on a value of 1 if the person works in a "high-paying" job and 0 otherwise. Suppose the relationships between wages, education, experience and occupation for males (M) and females (F) can be represented by the following equations using a cross sectional data: W = 3 + 0.5 ED + 0.6 EXP + OC, W_= 3 + 0.4 ED + 0.5 EXP + OC. Suppose that, on average ED = 4, and EXP = 10 for men, while for women the averages are ED = 3 and EXP = 6. Also assume that women are only employed in the low-paying jobs. a. Find the average wage of men and women. What is the ratio of women's wage to men's wage? What is the wage gap in percentage terms? b. Use the Blinder-Oaxaca decomposition method to find the amount of wage gap owing to discrimination. Express this amount as a percentage of total wage gap. C. Suppose the differences in occupations is not due to pre-market characteristics but occupational segregation. What is the most women could earn even if all of their productive characteristics were the same as men? What would be the ratio of women's to men's wages? Express the amount of current labour market discrimination in percentage terms