SIGNALING MODELS

Consider a labor market for men and women with two types of workers in each group, high ability (H types), and low ability (L types). H types among men have a productivity of 45 and L types among men have a productivity of 35. H types among women have a productivity of 80, and L types among women have a productivity of 40. There are equal proportions of each type within men and women. An employer is aware of all the above information, but is unable to observe types when she meets a man or a woman. What is the gender wage gap?

• 40
• 30
• There is no gender wage gap
• 20