Question

Using the labor demand and supply framework, explain why the gender wage gap was relatively constant between 1885 and 1980, and why the ratio of female–male earnings has increased from 0.628 in 1980 to 0.805 in 2010.

Answer 1

The labor demand and supply framework can be used to estimate the wage rate and quantity of labor, for a specific market, or the economy as a whole.

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Gender wage gap between 1885 and 1980:

• The service industry had not picked up, and most firms were manufacturing firms
• Demand for skilled labor was less, and higher demand of manual labor
• Supply of labor consisted of more males and fewer females, as suitable jobs were not available
• Rigidity of the social system, where women were not allowed to study or work
• Larger and rural-agricultural families

Female–male earnings between 1980 and 2010:

• More jobs now require service and support skills
• Society has become more conscious about the male-female parity
• Demand has risen for female workers, who excel at certain jobs
• Stronger laws if discrimination against women is proved
• Smaller and urban families
• Flexibility offered to females has increased

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In general, in the past 10 years or so, the demand for female workers has risen. The supply has not risen to the same extent. On the other hand, the supply of male workers has been rising consistently. This, along with the main factors listed above, has raised the wage rates of female workers.