Question

Explain the issue of “omitted skill variables” in relation to wage discrimination. Explain why you think this is or is not an important.

Answer 1

Omitted skill variable is one of the important issue giving rise to wage discrimination and in many of the cases this is being utilised as a cover up for the inherent biases in the form of race or gender in one's mind. Wage discrimination in some cases is supported by creating the perception of lack of skillset in an individual where as that is not the true case and is known as Omitted skill variable.

This is an extremely important variable to understand the wage discrimination ,where person is paid less salary than other on the pretext of lesser skill where the actual reason might be altogether different which may include racial or gender bias or may be becaus eo some personal conflict with that individual. While understanding wage discrimination we need to understand that in present organization's discrimination is not direct but is basis certain justification some of which might not actually be true like omitted skill variable or some may have valid reasoning.so, understanding omitted skill variable while making assessment with regards to wage discrimination and if that is being used as the coverup is the important factor needed to be verified