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Chapter 17: Problem 14

Lawrence Katz, an economist at Harvard, was quoted in a newspaper article as arguing that differences between the incomes of male physicians and female physicians "are largely explained by individual choices." He also noted that discrimination could account for part of the gap, "though it isn't clear how much." a. What did Katz mean by "individual choices"? How can individual choices result in differences between how much men and women are paid? b. Why is it difficult to estimate how much of the gap between what men and women are paid is due to discrimination?

Short Answer

Expert verified
Katz referred to individual career decisions including specialization, working hours, and career breaks as 'individual choices'. These choices can create pay disparities as some fields may pay more, and longer hours results in higher income. Women often tend to work fewer hours due to family commitments, affecting their income. The measurement of pay discrimination is complex due to the presence of various influencing factors, subtle discrimination experiences, and unobserved characteristics, apart from discrimination itself.

Step by step solution

01

- Define Individual Choices

Individual choices, in this context, refer to the decisions that people make regarding their career. These can include choices about the field of specialization, number of hours worked, time taken off for family and personal reasons, and accepting promotions or challenging assignments. Personal choices can play a significant role in influencing an individual's earnings as specific fields may pay more while working longer hours might amount to higher income.
02

- Examine Effect of Individual Choices on Gender Pay Gap

Personal choices can result in pay differences among men and women. Certain specializations in medicine that are high paying, may have a higher representation of men than women. Also, women often work fewer hours than men or may require flexible timings due to family responsibilities, which can impact the amount of money they earn. Additionally, people's willingness to negotiate their salaries also contributes to this disparity.
03

- Discuss Difficulty in Measuring Extent of Gender Pay Discrimination

Estimating the pay gap due to discrimination is complex as it's challenging to isolate the effect of discrimination from other factors that contribute to pay differences. These factors can include an individual's education, experience, performance rankings, and personal choices as discussed above. It's also hard to quantify experiences of subtle discrimination that can relate to biases in promotions, assignments, or other employment practices. Lastly, there’s also the issue of unobserved characteristics, qualities that employers value but are not easily measurable.

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