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Question: Suppose years of schooling, s, is the only variable that affects. The equations for the weekly sa...

Show transcribed image text Suppose years of schooling, s, is the only variable that affects. The equations for the weekly salaries of male and female workers are given by male: W_m = 500 + 100s Female W_f = 300 + 75s On average, men have 14 years of schooling and women have 12 years of schooling. a) What is the male-female wage differential in the labor market? b) Using the decomposition, calculate how much of this wage differential is due to discrimination? Each employer faces competitive weekly wages of $2,000 for whites and $1, 400 for blacks. Suppose employers undervalue the efforts/skills of blacks in the production process. In particular, every firm is associated with a discrimination coefficient, d (0 lessthanorequalto d lessthanorequalto 1). In particular, although a firm's actual production function is Q = 10(E_ + E_s), the firm manager acts as if its production function is Q = 10 E_ + 10 (1 – d) E_. Every firm sells its output at a constant price of $240 per unit up to a weekly total of 150 units of output. No firm can sell more than 150 units of output without reducing its price to $0. a) What is the value of the marginal product of each white worker? b) What is the value of the marginal product of each black worker? c) Describe the employment decision made by firms for which d = 0.2 and d = 0.8 respectively. d)For what value(s) of d is a firm willing to hire blacks and whites?

Suppose years of schooling, s, is the only variable that affects. The equations for the weekly salaries of male and female workers are given by male: W_m = 500 + 100s Female W_f = 300 + 75s On average, men have 14 years of schooling and women have 12 years of schooling. a) What is the male-female wage differential in the labor market? b) Using the decomposition, calculate how much of this wage differential is due to discrimination? Each employer faces competitive weekly wages of $2,000 for whites and $1, 400 for blacks. Suppose employers undervalue the efforts/skills of blacks in the production process. In particular, every firm is associated with a discrimination coefficient, d (0 lessthanorequalto d lessthanorequalto 1). In particular, although a firm's actual production function is Q = 10(E_ + E_s), the firm manager acts as if its production function is Q = 10 E_ + 10 (1 – d) E_. Every firm sells its output at a constant price of $240 per unit up to a weekly total of 150 units of output. No firm can sell more than 150 units of output without reducing its price to $0. a) What is the value of the marginal product of each white worker? b) What is the value of the marginal product of each black worker? c) Describe the employment decision made by firms for which d = 0.2 and d = 0.8 respectively. d)For what value(s) of d is a firm willing to hire blacks and whites?