Question

A Hypothetical downtown Halifax factory has two types of workers, skilled, paid $25 per hour, and unskilled paid $15 dollars per hour. There are 100 females and 100 males in the labour force with identical distribution between skilled and unskilled workers. Initially there is no discrimination based on gender.

1. Sketch two supply and demand graphs to reflect these two groups of workers; wages in the vertical access and labour force in the horizontal access.

2. What explanation would you give with regard to wage difference; being chefs paid more than servers?

3. Do men earn more or less, on average, than women. Explain

4. Now suppose that employers begin to discriminate against female workers and hire only mails as chefs. Show in the graph what happens in the each labour market?

5. In the situation in part “4” what happens to the wage differential between chefs and servers? What happen between females and males?

6. In the absence of any government intervention explain the forces that we expect might eliminate this discrimination over time.

Answer 1

2.

According to above given information, the chefs are being paid more than the servers this is because of their skill. The chefs are more skilled than servers and have better market knowledge with training. Therefore, the wages of chefs are more

3.

As it has been said in the question, that initially there is no gender discirmination, so the men and women earn more or less equally. There will be no difference in their wages in the market.

4.

Now, employers begin to discriminate against female workers and hire only males as chefs. This will increase the demand for skilled workers as males in the market and it will shift the demand for labor upwards. Due to an increase in demand the wages for males will rise. Similarly, the demand for unskilled labor declines followed by a decrease in wages of females.