Bob Higgs, responding on Facebook to an article in The Huffington Post
regarding the notion of gender discrimination in earnings:
The quality of economic journalism in the USA is terrible. Day after day, journalists write about the causes and consequences of economic conditions and events without understanding the underlying economics of the situation, and their articles are, as a rule, simply bunk.
....the best studies — those with the best data, most sensible model specification, and most exhaustive set of controls — have found virtually no difference in the amounts that men and women are paid for doing the same work. The key is “doing the same work,” which is another way of saying “providing equally valuable services to the employer” in the sense of adding equally to the employer’s net income.
Earnings reflect many choices by women who work as well as by employers who hire....
Simple example: suppose that there are only two employers. The first hires 10 men and 5 women, paying each employee a wage of $50 per hour; the second hires 5 men and 10 women, paying each employee a wage of $40 per hour. For all employees in this two-firm economy, men will earn an average of $46.67 per hour, and women will earn an average of $43.33 per hour. Yet there is no sex discrimination; by construction, every employer pays men and women exactly the same wage. If one employer pays a higher wage than the other, one may presume that the higher-paying employer is hiring employees with greater value-productivity.
If such were not the case, he’d be a very poor manager, because by paying, say, just $44.00 per hour, he could replace all of his current employees by hiring away those currently working for the lower-paying employer and save $2.67 per hour for each worker, or $40.05 per hour for his entire labor force, which would be a $40.05 contribution toward increasing his net income. Why would any employer forgo substantial additional net income simply to persist in sex discrimination (which, by the way, has been illegal since enactment of the Equal Pay Act of 1963)? And even if some employers tried to practice such discrimination, the employers who had no yen to sacrifice net income for the pleasure of discrimination would hire away his workers.
If sum, the so-called gender gap is almost certainly a myth, a persistent misapprehension kept alive by leftists who wish to use the power of government to benefit members of their political constituency. If employers truly discriminate between equally value-productive male and female employees, they do so only in cases that are few and transitory, because the systematic, persistent conduct of such discrimination is inconsistent with everything we know about how people make decisions in labor markets and about what we presume business owners in general are trying to do, namely, make profits.
The quality of economic journalism in the USA is terrible. Day after day, journalists write about the causes and consequences of economic conditions and events without understanding the underlying economics of the situation, and their articles are, as a rule, simply bunk.
....the best studies — those with the best data, most sensible model specification, and most exhaustive set of controls — have found virtually no difference in the amounts that men and women are paid for doing the same work. The key is “doing the same work,” which is another way of saying “providing equally valuable services to the employer” in the sense of adding equally to the employer’s net income.
Earnings reflect many choices by women who work as well as by employers who hire....
Simple example: suppose that there are only two employers. The first hires 10 men and 5 women, paying each employee a wage of $50 per hour; the second hires 5 men and 10 women, paying each employee a wage of $40 per hour. For all employees in this two-firm economy, men will earn an average of $46.67 per hour, and women will earn an average of $43.33 per hour. Yet there is no sex discrimination; by construction, every employer pays men and women exactly the same wage. If one employer pays a higher wage than the other, one may presume that the higher-paying employer is hiring employees with greater value-productivity.
If such were not the case, he’d be a very poor manager, because by paying, say, just $44.00 per hour, he could replace all of his current employees by hiring away those currently working for the lower-paying employer and save $2.67 per hour for each worker, or $40.05 per hour for his entire labor force, which would be a $40.05 contribution toward increasing his net income. Why would any employer forgo substantial additional net income simply to persist in sex discrimination (which, by the way, has been illegal since enactment of the Equal Pay Act of 1963)? And even if some employers tried to practice such discrimination, the employers who had no yen to sacrifice net income for the pleasure of discrimination would hire away his workers.
If sum, the so-called gender gap is almost certainly a myth, a persistent misapprehension kept alive by leftists who wish to use the power of government to benefit members of their political constituency. If employers truly discriminate between equally value-productive male and female employees, they do so only in cases that are few and transitory, because the systematic, persistent conduct of such discrimination is inconsistent with everything we know about how people make decisions in labor markets and about what we presume business owners in general are trying to do, namely, make profits.
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