Evaluate the following: "Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity)."
Economic theory suggests that this view is incorrect. If an employer could hire female employees at a wage rate lower than that paid to equally productive male workers, he could reduce his costs (and increase his profits) by substituting female for male workers. For a firm to minimize its unit costs, the change in output (marginal product) from the expenditure of an additional dollar must be equal for all inputs. This would not be true for employers who discriminate. An additional dollar spent on female employees would expand output more than an additional dollar on male workers. Thus, when an employer pays male workers wages higher than those paid to equally productive female employees (both actual and potential), his costs will increase relative to those of the non-discriminating employer.
You might also like to view...
When the price of a good increases, it
A. leads suppliers to place few goods on the market. B. the demand for the good shifts. C. leads consumers to want to buy more or less than before at a given price. D. a movement down along the demand curve will occur.
The following are features of the Asian model
a. high savings b. low shares of government c. large investments in human capital d. a, b and c are correct e. only a and c are correct
Between 2006 and 2008 the poverty rate
A. rose by about one percent. B. fell by about one percent. C. rose by around three percent. D. fell by about three percent.
Last year a pair of pants had a price of $20 and this year the price is $25. Which of the following expresses this price change accurately?
A. If last year is the base year, the index number for this year would be 80. B. If this year is the base year, the index number for last year would be 120. C. If this year is the base year, the index number for last year would be 80. D. If last year is the base year, the index number for this year would be 120.