### Describing labor and market discrimination

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##### Reference no: EM1312041

1. Suppose the ABC Corporation adopts a policy prohibiting its top-level executives, whose compensation packages include awards of ABC stock each year, from selling such stock until two years after they leave ABC. Use economic theory to analyze the incentive effects of this prohibition.

2. An economic study has found that men who are judged to be "ugly" have earnings that are 9% less than their "average-looking" peers with the same age, education, and occupation; those who are considered "handsome" make 5% more than average. Is this evidence of labor-market discrimination? Discuss fully.

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