Free sample essay on Economic literature analysis: Wages and labor supply

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1. literature review
The following paper reviews Bertrand's and Mullainathan working paper no. 9873 (2003) : A Field experiment on labor Market discrimination. It explains how the wages and labor supply curves  can never be perfectly inelastic. This state of in-elasticity is brought about by wage and labor discrimination in the labor market. Labor policies, gender and minority discriminations are some of the factors which makes the minority laborers to leave the labor force.
The paper presents studies on wage and labor discrimination as it addresses all the disincentive effects of the minority in the work place. It reveals that when employers fail to treat all workers in the same way discrimination is said to come in. it outlines discrimination as a possible cause of failure in the labor market.
2. Hypothesis
According to economist and Nobel prize winner, Kenneth arrow (2004),

Discrimination is “the valuation in the market place of personal characteristics of the worker that are unrelated to worker productivity”. These personal characteristics may be sex, race, age, national origin or sexual preference (7).

In testing the hypothesis, the paper highlights the different impacts discrimination brings to the labor market. It indicates that discrimination brings unhealthy imbalance in the distribution of income and wealth. On analyzing the labor market, suggestions from the article address that government intervention and training on employer conduct is the best way for curbing discrimination the work place. The government works on preventing discrimination through the installation of regulatory labor laws. Again, it shows that discriminating the minorities in the work place is said to reduce wage rates hence reducing the opportunities of employment as a whole (Bertrand & Mullainathan, 2003). it explains discrimination in the work place as the lack of consideration as other groups are considered maybe for training or promotion.
3. Techniques used in the paper
the paper uses discrete techniques to reveal the causes of discrimination in the work place. They include:
  1. Gary Beckers taste model – This model describes discrimination using the taste model. This taste is brought about by the state of the employers distaste in working with people from certain ethnic groups. This is linked to racial prejudice (Bertrand & Mullainathan, 2003).
  2. Ignorance by the employers – Failure to realize the productive ability of workers by the employees leads to discrimination. Race and gender are considered to be the main proxies in this form of discrimination.
  3. Crowding effects – crowding of the minorities in one place may lead to discrimination.

The paper also explains that although big changes are taking place globally in the labor market, discrimination still remains to be an enigma. It points out a report released by the women and work commission of the United States in February 2010. the report revealed a difference of 20% in the salaries of women to men both working full time.
The authors cite the following to be some of the factors which explain the ever increasing gap in gender discrimination in the United States:
  1. Human capital – Mostly, this is brought about by the difference in educational level between women and men. Again, the notion that men can deliver more effectively than women  helps elevate discrimination in the work place.
  2. Part – time work – significantly, most of the employed women in the United States work part time and part time work pays less. Studies in the paper reveals that 50% of the women with young babies in the United States don't go to work and if they do 65% of them are employed part time (Kenneth, 2004).
  3. Travel patterns – Mostly, women are unwilling to leave their place of residence to work in a different location. Therefore, employers discriminate women because of this factor lowering the wage equilibrium.
  4. Occupational segregation – Women mostly are concentrated in certain occupations like secretarial, cleaning, care and catering jobs. Studies in the paper reveal that in every pool of 100 women, 60 of them worked in the same occupation In the United States. This increasing misrepresentation of women in the high end jobs leads to them being discriminated in the work place. This effect is referred to as the 'glass ceiling' effect (Bertrand & Mullainathan, 2003).
  5. Pay discrimination – Direct discrimination in the work place leads to lack of imbalance in the wage equilibrium. Some workers just cant pay women the same rate they pay men.

4.Unanswered question
Even though the paper is somehow comprehensive, I feel that there are some areas which were not well presented. This is the study on the ethnic groups in the United States. In testing the hypothesis, I would first carry out a detailed review on all the sectors of economy and analyze the implications of the labor market in each. In collecting the data, I would use:
  1. Questionnaires
  2. Focused group discussions (FDG's) and
  3. Observations

After data collection, the data would be sorted, coded, entered and analyzed using the SPSS model of data analysis. To prove my results, I would use chi square method of statistics and kye square to determine the ordinary variable.
The results from this data would point out the implications of discrimination on American minority ethnic groups. My desk studies show that the ethnic minorities in the United States (Mostly Asians and Latinos) are over represented in low paid jobs such as the service industries. The service industry in the United States employs ¾ of the minority males while the self employed consists 3/5 of white men (Kenneth, 2004). Retail trade is also another sector which would form my basis of study in analyzing ethnic the implications of minorities in the United States.  
The ethnic minorities in the United States face two kinds of discrimination. They include:
  1. lack of access to better paying jobs as compared to their counterparts (mostly white)
  2. low wage rates per any job. This accounts for more than 5% of the point difference (Kenneth, 2004).

The impacts of discrimination will continue to be deeply experienced if employers continue to be ignorant on the production capabilities of their employees. Work place unions, federal and state governments, trade unions and other labor bodies should be on the forefront in fighting discrimination in the work place. This would be my recommendations

Baker, M., D. Benjamin, A. Desaulniers, & M. Grant "The Distribution of theMale/Female Earnings Differential, 1970-1990," Canadian Journal of Economics, Vol.28, No.3, 1995
Bertrand, M. and S. Mullainathan, ?Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination,? NBER Working Paper 9873, July 2003
Kenneth, A. (2004). Labor market discrimination. Retrieved on 17tyh march 2011 from <>
Wood, R. , M. Corcoran and P. Courant., "Pay Differences among the Highly Paid: The Male-Female
Earnings Gap in Lawyers' Salaries, "Journal of Labor Economics, Vol.11, No.3, 1993