Question

3) Female faculty are paid less on average at State University than male faculty. a) Is this evidence of labor market discrimination? Explain. b) If men and women are paid the same within university departments, can we conclude that there is not labor market discrimination? Explain. c) Assume demand is higher for engineering faculty than for humanities faculty, but supply is the same at any given wage. Further assume that a new state law requires the university to equalize pay gaps by paying faculty the same in all departments. Explain and illustrate the effects of paying engineers the salary of humanities faculty. d) Explain and illustrate the effects of raising salaries in the humanities to the level of engineering faculty.

Answer 1

Answer.  

1. If male are paid more than female for the same job, it is the form of labour market discrimination. Labour market discrimination explains that different people are paid different for the same work they do. In case of universities, if male faculty are paid higher as compared to female faculty, than female workers are facing discrimination in the form of 'gender pay gap'.

2. If different departments of the university have different pay scale, it is not the form of labour market discrimination. Given that male and female are paid same under different departments of the universiry, there is not discrimination. Labour market discrimination happen based on non-economic characterstics like race, gender, age, religion, etc.

3. Since, the demand for engineering faculty is higher than humanities faculty, salary for enginerring faculty would be higher as compared to humanities faculty, given the same supply. If the law equalise the pay for both faculty, and make it equal to humanities faculty; at that level of salary there will be excess demand of engineers by 'HA'. This is becuase salary for engineering faculty have fallen and thus, there will be less supply and more demand. (see figure)

4. On the contrary, if salary of humanities faculty is raised to engineering faculty to make them equal, this would lead to a situation of excess supply in humanities department by 'BE'. Thus, at the salary equal to engineering faculty, supply of humanities faculty would increase. (see figure)

Entess Supply Supply X A i 1 I , Encess semand demand of Enginering demand of Humanity н, Е. facuty