Calculate wage differential, Econometrics

Suppose years of schooling, s, is the only variable that affects earnings. The equations for the weekly salaries of male and female workers are given by wm = 500 + 100s and wf = 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 labour market?

(b)  Calculate how much of this wage differential is due to discrimination and how much is due to difference in skills.



Posted Date: 2/28/2013 2:20:06 AM | Location : United States

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