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. (15 Marks)

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.

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.