Suppose that two wage regressions are estimated for native and white workers: Wn

Question

Suppose that two wage regressions are estimated for native and white workers:
Wn = 5.0 + 0.10S
Ww = 6.0 + 0.14S

Pick a reasonable average level of schooling for white and Native workers based upon the
literature. (Make sure you explain where you obtained your numbers) Draw the respective
wage pro les for white and Native workers. Indicate on your graph the raw wage di erential.

How much of the difference in wages between whites and Natives is due to differences in edu- cation levels

Indicate on your graph in (a), the portion of the wage differential attributable to educational differences between the sexes

. How much of the difference in wages men and women is due to discrimination or is un- explained?

Indicate on your graph in (a) the portion due to labor market discrimination/unexplained.

Explanation / Answer

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