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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_m = 500 + 100s

W_f = 300 + 75s

On average, men have 14 years of schooling and women have 12 years of schooling.

a. What is the average male-female wage differential in the labor market?

b. How much of this wage differential is due to discrimination? Note that there are two possible ways to calculate this, so do it both ways and compare the two answers you get.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91671876

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