Question

What are the expected outcomes for employment and wages with statistical discrimination?

Answer 1

The employment is necessary for everyone and of course, the main reason for doing employment is wages. Everyone expects a good employment environment and along with minimum wages. The employment will offer based on their skills so if they had good skills then they will offer high wages OR else they will give fewer wages to non-skilled workers. Normally, we regularly see these two kinds of employed persons and we may analyze the person to whom he/she belongs to the category of either skilled or unskilled employed person.

Let us discuss their employment and wages briefly.

As we discussed the variance in employment as skilled and unskilled workers. An unskilled worker growth will freeze at a certain point of time because the expected outcome won’t grow more.

Let us see the example:

The person working as labor in rice factory so his initial wage was $8 at the beginning of his career later he continuously worked in the same place after 5 years the wage was fixed $12. That is his final wage how long he continuously worked in the same place.

However, the skilled worker wage is quite contrasting with an unskilled worker. If the labor gained experience similarly the wage also increased similar to his talent.

Let us see one example.

The labor is joined an automobile factory as a skilled worker so his initial wage was $8. He continued the job in the same organization 5 years later his wage was increased to $28 based on his experience. The growth has plenty of choices for him to gain the experience similarly the wage will increase to him along with designation.

We saw two examples above based on the skilled wage and unskilled wage along with the growth of their career. The expected outcomes will more from the skilled workers but the employer will not expect more outcome from the unskilled labor so their wage will be fixed with a certain point of time and it won’t grow later.