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Microeconomics Question from Walter E. Williams:Edit

Assume that men and women are equally productive in a certain occupation but the conditions of supply between men and women differ is not numerically different). Produce an argument showing that the profit maximizing firm will engage in wage discrimination between men and women. Make sure you explain the supply differences.

AnswerEdit

Because women have been traditionally paid less over time than men due mainly to their absence or potential absence from the workforce due to child bearing/caring responsibilities, they will supply a greater amount of labor for a lower wage than will men. The result is that firms can pay women less for comparable work because there is a large number of women who will work at the lower wage. At this lower wage, there will be a relatively lower number of men who will supply their labor so the firm is able to discriminate between women and men. Men tend to demand and receive a higher wage than women for comparable work – due in large part to the amount of labor supplied at any given wage level.

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