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Summary - Assignment Example

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Investigating the link between competition and discrimination The article is inspired form the theory formulated by Gary Becker in 1957 that says; in a perfectively competitive market structure, only those employers who do not discriminate can exist in the long run…
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The authors work with Elizabeth Brainerd is based on two hypotheses. Firstly, competitive industries do not have discrimination, so in case of an exogenous shock (increased trade) the effect of discrimination is negligible. Secondly, in less competitive industries, scope of discrimination is more, so in case of the same exogenous shock narrowing the gender wage gap would be considerable. Since theoretically, the wage differential in competitive industries is nil, by providing for increased trade, the authors could compute the gender wage gap in concentrated industries. The survey covering the period 1977-94 used data from Current Population Survey. The population comprised of individuals aged 18 to 64 and working as full time. First log wage of all individuals was regressed on education, age, agesqaured and nonwhite dummy variable. Then the residual gender wage gap was computed from difference in average residual wages for male and female at industry level. The industry level results were matched to trade level results, with trade measured as import shares. The findings show that an increase in import share leads to reduction in gender wage gap in concentrated industries. However overall increase in trade have a negative impact on relative wages of women. These results can also be factored on decline in unionization and not discrimination impact. ... Read More
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