Question

AW = $17-5 7. Suppose that, on average, men earn $17 an hour and have an average of 15 years of schooling. Women earn $15 an hour and have an average of 14 years of schooling. If the estimated return to schooling for men is 0.30 (implying that each additional year of schooling translates into an additional 30 cents per hour) and the returns for schooling for women is 0.2, then the gender gap in schooling explains: explained Ba (S-E partion A. 15% of the wage gap between men and women. B. 10% of the wage gap between men and women. C. 60% of the wage gap between men and women. D. 15% or 10% of the wage gap depending on the returns to schooling number used. E. 20% or 30% of the wage gap depending on the returns to schooling number used. 0.3 L1514) 20.3 Xl00

Answer 1

Solution: (7) Given on average men earn = $17 an hour average schooling - 15 years women earn = 815 an hoy average schooling = 14 years Estimated returns to schooling for men = 0.30 . for women = 0.2 The gender gap in schooling explains. -) on an average men ear $17 per hour and have Isyears Schooling . In case of coomen average carning is 815 perhart and they have lugnt of schooling .. There is a wage gap of (17-15) = 28 for Schooling difference of = ( 15-14) - Iyear. The estimated retorn on schooling for men is 0.30. (means each additional grof schooling gives 30 cents

increase in earning perhous. So gender gap in schooling lie) lyr gap will give 30 cents difference in earning. for extra year of schoo there can earn extra $0.30 in case of men so for year schooling these can be extra earning of $0.30. 1 year of schooling the cagegapix > But for extra → This wage gap earning should have been 80.30 for extra (year of schooling. So genecker gap in schooling explaine lof ofwage 0,30 K100 option (A) is correct (A): 150% of wage gap between men and women