1week9 labor 2008 by Daniel J.B. Mitchell

MGT. M259C: Analysis of Labor Markets --PP CM230 Labor Markets and Public Policy Daniel J.B. Mitchell Ho-su Wu Professor Anderson School and School of Public Affairs

Reminder

Women and Minority Experience in the Workforce  Empirical

trends  Concepts of discrimination Pre-Market Current Statistical  EEO

policy analysis  Comparable worth  Dualism in labor markets

Empirical Trends Participation U.S International

Pay Unemployment

Early State Protective Legislation U.S. Supreme Court decision in Muller v. Oregon (1908) upholding state law limiting female hours: “…(a woman’s) physical structure and a proper discharge of her maternal functions - having in view not only her health, but the well-being of the race justify legislation to protect her from the greed as well as the passion of man.”

Justice Louis Brandeis

Phoenix Mill Ford Parts Factory: 1922-1948 ď Ž

ď Ž

Women earned $8/day; same as men in other Ford plants Only employed single women, widows, and wives of disabled WW1 veterans when it opened.

Married women not employed

Male and Female Participation Rates 100 90 80 60 Female Male

50 40 30 20 10

2000

1990

1980

1970

1950

1946

1945

1944

1943

1942

1941

1940

1930

1920

0 1900

Percent

Declining male participation after WW2 Long-term upward trend in female participation with bump up during WW2 Includes Armed Forces in 1940s Histpart.wk3

Male 1948 Female 1948 Male 2000 Female 2000

Participation by Age 100

Percent

90 80 70 60 50 40 30 20 10 0

16-19

20-24

25-34

35-44

45-54

55-64

65+

Male > female both periods but gap much larger in earlier period (male falls and female rises over time) ď ° Female no longer shows childbearing dip ď ° Elderly male rates show dramatic drop over time ď °

Agepart.wk3

Postwar Ideal

Contemporary

Improvement?

Stylized Facts and Trends employment pay unemployment

eeowage.xls

E/Pop Ratios (percent) 80 75 70 65 60 55 White male White female Black male Black female

50 45



 

Business cycle effects influence data but black and white males show gradual decline apart from cycle. Black male E/Pop < white male E/Pop. Black female E/Pop converges with white female E/Pop in late 1990s after long hiatus. Both show longterm upward trend.

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

eeowage.xls

E/Pop Ratios (percent) 80 75 70 White male

White female Hispanic male

Hispanic female

55 50 45



White and Hispanic male E/Pop about the same until mid-1990s when Hispanic becomes > white. Large gap between Hispanic male and female E/Pop ratios and between white and Hispanic female ratios. But Hispanic female ratio shows rising trend as does white female ratio.

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

eeowage.xls

E/Pop Ratios (percent)

80 75 70

Black male Hispanic male

Black female Hispanic female

60 55 50 45

ď ą Hispanic

male E/Pop ratio > Black male ď ą Hispanic female E/Pop ratio < Black female but both rising

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

eeo.wage.xls

Female/Male Usual Weekly Earnings, Full Time (percent) 90 80 70 60 50 40 30 20 10

ď ° Female-to-male

earnings

ratio < 1 ď ° Overall female-male earnings ratio rose in 1980s, early 90s, early 2000s Data for 2nd Qtr of Year Shown

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

eeowage.xls

Usual Weekly Earnings Ratios, Full Time (percent) 100 Nonwhite/white female

Black/white female

90 85 80 Black/white male

Nonwhite/white male

Black female/white female earnings ratio > Black male/white male ratio ď ° Slippage in female Black/white earnings ratio after mid-1970s ď °

Data for 2nd Qtr of Year Shown

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

eeowage.xls

Usual Weekly Earnings Ratios (percent) 90 85 80 Hispanic/white female

75 70 Hispanic/white male

Hispanic female/white female earnings ratio > Hispanic male/white male ratio ď ° Slippage in Hispanic/white earnings ratio for both sexes relative to early 1980s ď °

Data for 2nd Qtr of Year Shown

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

eeowage.xls

Unemployment Rate Ratios 3.0 2.8 2.6 2.4 2.2 2.0 1.8

Female/Male

1.6

Black/white male

1.4

Black/white female

1.2 1.0



Female/male ratio fell to approximately unity in 1980s. Male rates more cyclically sensitive than female. Black unemployment rates typically are 2 to 2.5 times white rates. Cyclical movement of black/white ratios (esp. male) suggest a “structural” unemployment problem.

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

1971

1969

0.8

eeowage.xls

Unemployment Rate Ratios 2.200 2.000 1.800 1.600 1.400

Hispanic/white male Hispanic/white female

1.200

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

1.000

ď ˛ Hispanic

unemployment rates exceed white rates by sex. ď ˛ May be a convergence trend setting in starting mid-1990s.

Concept of Discrimination Values, language Human capital

Current: Based on Tastes Employer tastes? Customer tastes? Employee tastes?

Statistical Analytical problems for current and statistical approaches

Gary Becker

Pre-Market (Social)

Concept of Discrimination ď °Pre-Market (Social) Values, language Human capital

Booker T. Washington dines at White House with Theodore Roosevelt (1901)

1908 Presidential Election

William Howard Taft â&#x20AC;&#x201C; R vs. William Jennings Bryan - D

Extensiveness Required Assume labor supply of 800,000 whites and 200,000 blacks wage SW

w* DT 0

.8 m 1 m .2 m = SB

labor

Extensiveness Required Assume labor supply of 800,000 whites and 200,000 blacks If employers of 100,000 workers are prejudiced against blacks, the labor market would simply create two sectors. Unprejudiced sector has 700,000 whites and 200,000 blacks. Prejudiced sector has 100,000 whites. Wage still = w*

Extensiveness Required Assume labor supply of 800,000 whites and 200,000 blacks If employers of 850,000 workers become prejudiced against blacks, the labor market would not clear at wage = w*. Unprejudiced sector would have surplus of 50,000 at w*. Prejudiced sector would have deficit of 50,000 at w*. Market would produce racebased wage differential: Ww > w* > Wb

Summary Assume labor supply of 800,000 whites and wage 200,000 blacks

Ww w* Wb

.8 m 1 m

size of prejudiced sector

The “International Trade” Model Applied Locally

Basic Regression Study Approach  

Outcome = f(background variables, dummy) Dual equations... OutcomeWHITE = f(background variables) OutcomeBLACK = f(background variables)



Change over time could indicate policy impact

Wage

Wage White Black

Edu

White Black

Edu

Federal Legislation  Equal

Pay Act (1963)  Title 7, Civil Rights Act (1964, amended 1972)

Federal Legislation  Equal

Pay Act (1963)  Title 7, Civil Rights Act (1964, amended & extended 1972)  Executive Order 11246 (1965)  Rehabilitation Act (1973)  Age Discrimination in Employment Act (1967)  Americans with Disabilities Act (1990)

Federal Legislation  Equal

Comparable Worth Issue

a.k.a. Pay Equity $

crowdingfm.xls

Percent Female & Female/Male Earnings Ratio: 2008-I 120 100 80 60 % Female Female/Male Earnings

40 20

Female â&#x20AC;&#x153;crowdingâ&#x20AC;? in administrative support and certain services is not clearly associated with a lower than average female/male wage ratio

Construction & extraction

Installation, maintenance, repair

Transport & Material Moving

Farm, Fish, Forestry

Production

Sales & Related

Mgmt., Business, Financial

Service

Professional & Related

Office & Admin Support

Percent Female vs. Weekly Earnings: 2008-I 80

$1,200 % Female

$1,000

Weekly Earnings

$800

50 40

$600

$400

20 $200

10 Construction & extraction

Installation, maintenance, repair

Transport & Material Moving

Farm, Fish, Forestry

Production

Sales & Related

Mgmt., Business, Financial

Service

Professional & Related

$0 Office & Admin Support

High wages are not necessarily found in occupations where women are relatively uncommon (skilled blue collar) but skilled blue collar wages tend to be higher than office & administrative support wages crowdingfm.xls

Various Countries

Australia Canada U.S.

Related Compensation Issue

Pensions Insurance $?

Related Compensation Issue

Labor Market Dualism Dualism

Stable Good wages Good benefits Good work habits required Career ladder

Bad jobs Unstable Low wages Few benefits Poor work habits tolerated Dead end

Peter Doeringer & Michael Piore

Good jobs

MGT. M259C: Analysis of Labor Markets --PP CM230 Labor Markets and Public Policy Daniel J.B. Mitchell Ho-su Wu Professor Anderson School and School of Public Affairs

MACRO micro