LABOR MARKET DISCRIMINATION

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1 LABOR MARKET DISCRIMINATION
Labor Economics Series LABOR MARKET DISCRIMINATION

2 Tokoh Pejuang Wanita Indonesia
Raden Adjeng Kartini 21 April 1879 – 17 September 1904

3 Pemikiran Raden Adjeng Kartini
Adanya keinginan untuk memperbaiki kondisi kaum wanita yang disebabkan kungkungan adat, antara lain : Dunia wanita hanya sebatas tembok rumah. Tidak bebas mendapatkan akses pendidikan. Dipingit dan dinikahkan dengan pria yang tidak dikenal.

4 Fakta di Indonesia

5 Penduduk yang Bekerja (2007)

6 Penduduk yang Bekerja (2007)
Jenis Pekerjaan Utama JENIS KELAMIN Jumlah Pria Wanita Tenaga Profesional Kepemimpinan 57.295 Tata Usaha TU Penjualan TU Jasa TU Pertanian Produksi Lainnya 15.926

7 Rata-rata Upah (2006)

8 Rata-rata Upah (2006) LAPANGAN PEKERJAAN PRIA WANITA SEKTOR 1
Pertanian, Kehutanan, Perburuan, Perikanan (Agriculture,Forestry,Hunting,Fishery) 2 Pertambangan, Penggalian (Mining and Quarrying) 3 Industri Pengolahan (Manufacturing Industries) 4 Listrik, gas dan air (Electricity, Gaz and Water) 5 Bangunan (Construction) 6 Perdagangan Besar, Rumah Makan & Hotel (Wholesale Trade,Restaurant & Hotel) 7 Angkutan, Pergudangan dan Komunikasi (Transportation,Storage & Communication) 8 Keuangan, Asuransi,Jasa Perusahaan (Financing,Insurance,Business Services) 9 Jasa Kemasyarakatan (Public Services) Rata-rata

9 Penduduk yang Bekerja Berdasarkan Jam Kerja Tahun 2007

10 Konsep Diskriminasi

11 Konsep Diskriminasi George Borjas :
Differences in EARNINGS and EMPLOYMENT OPPORTUNITIES among equally skilled workers employed in the same job simply because of the worker’s race, gender, national origin, sexual orientation, or other seemingly irrelevant characteristics.

12 Konsep Diskriminasi Discrimination means treating people differently and less favourably because of characteristics that are not related to their merit or the requirements of the job. These include race, colour, sex, religion, political opinion, national extraction and social origin.

13 The Discrimination Coefficient

14 The Discrimination Coefficient
Lauched for the first time by Gary S. Becker The Economics of Discrimination (1957)

15 The Discrimination Coefficient
Basic Concept : Taste Discrimination Assumption  Two types of workers : White workers : wage  wW Black workers : wage  wB

16 The Discrimination Coefficient
If the employer is prejudiced againts black, employer gets disutility from hiring black workers. Disutility : employer will act as if costs for black worker wB (1 + d), where d is positive number and is called : The Discrimination Coefficient

17 The Discrimination Coefficient
Suppose that wB = $10, and that d =0,5 ; the employer will then act as if hiring a black worker costs $ 15 The greater the prejudiced, the greater is the disutility from hiring black workers, and the greater is the discrimination coefficient d.

18 The Discrimination Coefficient
If these black employers prefer to hire black workers, they will act as if hiring a black worker is cheaper than it actually is. Nepotism Coefficient  wB (1 – n )

19 Labor Market Discrimination Analysis

20 Employer Discrimination

21 Skill and Labor Market Outcomes (2001)
WHITE BLACK HISPANIC Male Female Highschool Graduate or more (Percent) 84.3 85.2 78.5 78.9 56.1 57.9 Bachelor’s degree or more (Percent) 29.1 25.4 16.4 17.5 11.0 11.2 Labor Force Participation Rate (Percent) 79.9 59.9 72.1 65.2 83.8 59.3 Unemployment Rate (Percent) 4.7 3.6 8.0 7.0 5.2 6.6 Annual Earnings (in $1,000) 49.8 29.6 33.5 26.0 30.8 22.3 Annual Earnings (Full Time) 55.4 37.1 38.5 34.3 28.0

22 Fact : White Wage > Black Wage

23 Employer Discrimination
Assumption : White Workers and Black Workers are Perfect Subtitutes in Production. Firms’s output depends on the total number of workers hired, regardless of their race  have the same Marginal Product of Labor ( MPE )

24 Employer Discrimination
Production function: q = f ( EW + EB ) q  firm’s output EW  number of white workers hired EB  number of black workers hired

25 Employment in a non Discriminatory Firm

26 Employment in a non Discriminatory Firm
Both groups of workers have the same Value of Marginal Product, a non discriminatory firms will hire whichever group is Cheaper Suppose that wW > wB , a firms that doesn’t discriminate will hire black workers up to the point where wB = VMPE 

27 The Employment Decision of a Firm That Does Not Discriminate
? Black workers wage is less than white wage VMPE Dollar wB = VMPE How many worker will be hired..?? Employment

28 Employment in a Discriminatory Firm

29 Employment in a Discriminatory Firm
The employer act as if black wage is not wB , but instead equal to wB (1 + d). Where d is discrimination coefficient. The employer’s hiring decision based on a comparison wW and wB (1 + d) Hire only blacks if wB (1 + d) < wW Hire only white if wB (1 + d) > wW

30 Employment in a Discriminatory Firm
As long as black and white workers are perfect subtitutes, firms have a segregated workforce. Employer’s who have little prejudice and hence have small discrimination coefficient, will hire only BLACKS (called “Black Firm”). Employer’s who are very prejudice and have very large discrimination coefficient, will hire only WHITES (called “White Firm”).

31 Employment in a Discriminatory Firm
WHITE FIRM The white firm hires workers up to the point where : wW = VMPE Assumption : wW > WB The white firm is paying an excessively high price for its workers and hires relatively few workers ( )

32 The Employment Decision of a Prejudiced Firm
Dollar White Firm VMPE Employment

33 Employment in a Discriminatory Firm
BLACK FIRM Non discriminatory firms : wB = VMPE  If discrimination coefficient d0 : Price of Black Labor  wB ( 1 + d0 ) Amount of Labor hired : wB ( 1 + d0 ) = VMPE

34 Employment in a Discriminatory Firm
BLACK FIRM The number of black workers hired, therefore, is smaller for firms that have larger discrimination coefficient.

35 The Employment Decision of a Prejudiced Firm
Dollar Discrimination Coefficient Black Firm VMPE Employment

36 Discrimination and Profits

37 Discrimination and Profits
Firms that discriminate lose on two counts : The prejudiced employer could have hired the same number of black worker at lower wage. Because black and white workers are perfect subtitutes. Discriminatory black firms are hiring too few workers ( or )  they are giving up profits in order to minimize contact with black workers.

38 Profit and Discrimination Coefficient
Dollar max Max Profit w Black Firm White Firm Discrimination Coefficient dw

39 Discrimination and Profits
The Most Profitable Firm  Zero Discrimination

40 Labor Marker Equilibrium

41 Discrimination and Profits
Firm dengan Discrimination Coefficient : Rendah  cenderung Black Firm Tinggi  cenderung White Firm Asumsi : Supply Black Worker Perfectly Inelastic  sejumlah N Black person tidak terpengaruh tingkat upah.

42 Labor Market Equilibrium
Black-White Wage Ratio S D’ 1 R D N Black Employment

43 Employee Discrimination

44 Employee Discrimination
Diskriminasi dilakukan oleh “Fellow Worker” Misal : White worker yang bekerja pada Black Firm dengan upah wW akan merasa mendapat upah wW (1- d). Tidak berpengaruh terhadap “Profitability of Firms” karena white worker dan black worker adalah perfect subtitutes sehingga firm membayar jumlah upah yang sama.

45 Customer Discrimination

46 Customer Discrimination
Dikemukakan oleh Harry J. Holzer dan Keith R. Ihlanfeldt (1998)  research di Atlanta, Boston, Detroit dan Los Angeles. Keputusan membeli tidak ditentukan oleh Actual Price ( p ) tapi oleh The Utility-Adjusted Price  p (1 + d). Employer dapat mengatur tenaga penjualan sesuai kondisi.

47 Customer Discrimination
TYPE FIRM > 50 % BLACK CUSTOMER > 75 % WHITE CUSTOMER PERBEDAAN Customer & worker bertemu 58,0 % 9,0 % 49,0 % Customer & worker tidak bertemu 46,6 % 12,2 % 34,4 % Perbedaan - 14,6 %

48 Customer Discrimination and NBA
Lawrence Kahn and Peter Sherer 1998) : A study of attenance records indicates that replacing a black player with an eqqually talented white player bring in about 9,000 additional fans per year. At $50 a head (a very conservative estimate of ticket prices and concession revenues), the racial switch would increase annual team revenues by roughly $450,000

49 Measuring Discrimination

50 Measuring Discrimination
Asumsi : Tenaga kerja terdiri dari Male, dengan average wage Female, dengan average wage Diskriminasi : selisih average wage, yaitu :

51 Measuring Discrimination
Pengembangan model : Schooling mempengaruhi pendapatan Earning Function : Male : Female : menyatakan pendapatan pria meningkat bila mendapatkan tambahan 1 tahun pendidikan.

52 Measuring Discrimination
Model Regresi :

53 Measuring The Impact of Discrimination on the Wage
Men’s Earning Function Men’s Earning Dollars Men’s Earning Women’s Earning Function Women’s Earning Measure Discrimination : Woman’s Earning Women’s Schooling Men’s Schooling Schooling

54 Trend in Female-Male Wage Ratio (USA 1930-1990)

55 Global Gender Gap 2007 INDONESIA Rank 2007 : 81
Score 2007 : ( 1 = equality ) Rank 2006 : 68 Score 2007 : ( 1 = equality )

56 Global Gender Gap 2007

57 Global Gender Gap 2007 INDONESIA

58 Terima kasih…