Suppose that a pay equity plan has just been put in place in your organization. The pay equity consulting firm did a job evaluation and assigned points to each of the male-dominated and female-dominated jobs. It then estimated the following male and female pay lines by ordinary least squares regression, where Y denotes annual earnings, P denotes job evaluation points, and the subscripts m and f denote male and female respectively:
Ym = 5000 + 100Pm
Yf = 4000 + 80Pf
Assume that you were an employee in the female-dominated jobs and that your job evaluation score was 200.
a. What would your pay before pay equity?
b. What would it be after pay equity? What is the magnitude of your pay equity award?