Question

Discuss a policy to address gender wage inequity. Describe the potential benefits and costs of this policy. Then discuss whether you think this policy would be effective in reducing gender discrimination in the labor market.

Answer 1

A policy:

Workers would be paid equally if the work has equal value.

Potential benefit:

It benefits under-paid workers, like women.

Potential cost:

It costs employers, since they have to pay additional amount to those for equalizing who were being paid lower earlier. Usually women are being paid lower than men; this policy forced employers to pay women same as men. Therefore, it creates additional payment burden.

Discussion:

The policy can be effective if the labor market is transparent and fair. There are two components in a labor market – wage and quantity of labor. If there is no hiding, supply of labor would meet with demand of labor in order to get equilibrium wage and quantity. Sometimes such transparency may not be there if the market is experiencing excess supply than demand – employers may negotiate with female labors for a lower pay compare to male labors; since this is negotiated, there may not be any valid documents proving that.

Therefore, in order to get the best effect of such policy the government has to enforce transparency in the labor market first.