A large employer gives each new hire an aptitude test, which is scored from 1 to...

A large employer gives each new hire an aptitude test, which is scored from 1 to 20. Let T be a worker’s score on the test. The firm then pays the new worker a wage of W0.5T + 0.5G where G is the average score for the worker’s gender: 16 for women and 12 for men. What is the wage for a male who scores 16 on the test? Now, suppose that the employer still uses the same formula, but that the wages paid to male workers and to female workers are identical. In this case, is anyone facing discrimination? Explain.

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Expert Solution

Wage is set with the help of this formula = 0.5T + 0.5G

Wage of male who scores 16 in the test = 0.5 * 16 + 0.5 * 12 = 14

If employer give same wage to male and female, femalea test taker must have scored low marks than male test marks in test because G for female is larger than G for male in the formula above. Discrimination occurs when female get more marks than male or the sum of formula is higher for female than male but end up getting low wage than male which is not the case here. As the score used to calculate the wage and value of G is pre - defined, it is completely dependent upon the test taker to grab maximum wage rate.

Rahul Sunny answered 1 year ago

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