LABOR MARKET DISCRIMINATION

LABOR MARKET DISCRIMINATION

Labor Economics Series

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Tokoh Pejuang Wanita Indonesia

Raden Adjeng Kartini21 April 1879 – 17 September 1904

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Pemikiran Raden Adjeng Kartini

• Dunia wanita hanya sebatas tembok rumah.

• Tidak bebas mendapatkan akses pendidikan.

• Dipingit dan dinikahkan dengan pria yang tidak dikenal.

Adanya keinginan untuk memperbaiki kondisi kaum wanita yang disebabkan kungkungan adat, antara lain :

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Fakta di Indonesia

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Penduduk yang Bekerja (2007)

0

10.000.000

20.000.000

30.000.000

Wan

itaP

ria

Wanita Pria

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Penduduk yang Bekerja (2007)

Jenis Pekerjaan Utama JENIS KELAMIN

Jumlah Pria Wanita

Tenaga Profesional 1.945.782 1.857.339 3.803.121

Kepemimpinan 310.089 57.295 367.384

Tata Usaha 2.608.947 1.383.556 3.992.503

TU Penjualan 8.590.673 8.046.116 16.636.789

TU Jasa 3.351.697 2.992.762 6.344.459

TU Pertanian 26.479.175 15.753.497 42.232.672

Produksi 18.446.465 5.325.368 23.771.833

Lainnya 418.454 15.926 434.380

Jumlah 62.151.282 35.431.859 97.583.141

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Rata-rata Upah (2006)

0

400.000

800.000

1.200.000

1.600.000

Wan

ita Pri

a

Wanita Pria

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Rata-rata Upah (2006)

SEKTOR LAPANGAN PEKERJAAN PRIA WANITA

1 Pertanian, Kehutanan, Perburuan, Perikanan

(Agriculture,Forestry,Hunting,Fishery) 438.149 234.586

2 Pertambangan, Penggalian (Mining and Quarrying) 1.541.24

1771.415

3 Industri Pengolahan (Manufacturing Industries) 826.257 583.768

4 Listrik, gas dan air (Electricity, Gaz and Water) 1.176.16

01.338.737

5 Bangunan (Construction) 734.070 1.073.573

6 Perdagangan Besar, Rumah Makan & Hotel (Wholesale

Trade,Restaurant & Hotel) 806.110 621.248

7 Angkutan, Pergudangan dan Komunikasi (Transportation,Storage &

Communication) 934.761 944.419

8 Keuangan, Asuransi,Jasa Perusahaan (Financing,Insurance,Business

Services) 1.422.25

21.461.926

9 Jasa Kemasyarakatan (Public Services) 1.126.55

9789.557

Rata-rata 827.101 612.131

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Penduduk yang Bekerja Berdasarkan Jam Kerja Tahun 2007

0

15.000.000

30.000.000

45.000.000

WanitaPria

Wanita 803.388 14.623.275 20.005.196

Pria 1.798.703 15.615.701 44.736.878

<1 jam 1-35 jam >35 jam

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Konsep Diskriminasi

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Konsep Diskriminasi

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.

George Borjas :

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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.

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The Discrimination Coefficient

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The Discrimination Coefficient

The Economics of Discrimination (1957)

Lauched for the first time

by Gary S. Becker

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• Basic Concept : Taste Discrimination

• Assumption Two types of workers :

• White workers : wage wW

• Black workers : wage wB

The Discrimination Coefficient

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• 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

The Discrimination Coefficient

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• 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.

The Discrimination Coefficient

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• If these black employers prefer to hire black workers, they will act as if hiring a black worker is cheaper than it actually is.

The Discrimination Coefficient

Nepotism Coefficient wB (1 – n )

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Labor Market Discrimination Analysis

FIRM

Non DiscriminatoryFirm

W = VMP

DiscriminatoryFirm

White Firmagaints Black

Black Firmagaints Black

DiscriminationCoefficientis very High

DiscriminationCoefficient

is relatively Low

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Employer Discrimination

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Skill and Labor Market Outcomes (2001)

WHITE BLACK HISPANIC

Male Female Male Female 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 30.8 34.3 28.0

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Fact :

White Wage > Black Wage

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• 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 )

Employer Discrimination

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Employer Discrimination

Production function:

q = f ( EW + EB )

q firm’s output

EW number of white workers hired

EB number of black workers hired

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Employment in a non Discriminatory

Firm

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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 *BE

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The Employment Decision of a Firm

That Does Not Discriminate

Bw

Dollar

Employment*BE

Black workers wage is less than white

wage How many workerwill be hired..??

?VMPE

wB = VMPE

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Employment in a Discriminatory Firm

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• 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

Employment in a Discriminatory Firm

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• 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”).

Employment in a Discriminatory Firm

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• 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 ( )

Employment in a Discriminatory Firm

WHITE FIRM

*WE

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Ww

Dollar

Employment*WE

VMPE

The Employment Decision of a Prejudiced Firm

White Firm

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• Non discriminatory firms :

wB = VMPE

• If discrimination coefficient d0 :– Price of Black Labor wB ( 1 + d0 )

– Amount of Labor hired :

wB ( 1 + d0 ) = VMPE

Employment in a Discriminatory Firm

BLACK FIRM

*BE

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Employment in a Discriminatory Firm

BLACK FIRM

The number of black workers hired, therefore, is smaller for firms that have larger discrimination coefficient.

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The Employment Decision of a Prejudiced Firm

Bw

*BE

0BE

Dollar

Employment

VMPE

Black Firm

1BE

01 dwB

11 dwB

Discrimination Coefficient

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Discrimination and Profits

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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.

Discrimination and Profits

0BE

1BE

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Dollar

DiscriminationCoefficient

BlackFirm

Profit and Discrimination Coefficient

max

w

dw0

White Firm

Max Profit

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The Most Profitable Firm 

Zero Discrimination

Discrimination and Profits

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Labor Marker Equilibrium

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• 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.

Discrimination and Profits

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Labor Market Equilibrium

Black-WhiteWage Ratio

*)/( WB ww

Black Employment0

1

S

R

D

D’

)'/( WB ww

N

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Employee Discrimination

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• 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.

Employee Discrimination

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Customer Discrimination

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• 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.

Customer Discrimination

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Customer Discrimination

TYPE FIRM> 50 %BLACK

CUSTOMER

> 75 %WHITE

CUSTOMERPERBEDAAN

Customer & worker bertemu 58,0 % 9,0 % 49,0 %

Customer & worker tidak bertemu 46,6 % 12,2 % 34,4 %

Perbedaan - - 14,6 %

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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

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Measuring Discrimination

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Measuring Discrimination

___

MW___

FW

_________

FM WWW

Diskriminasi : selisih average wage, yaitu :

Asumsi : Tenaga kerja terdiri dari• Male, dengan average wage

• Female, dengan average wage

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Measuring Discrimination

Pengembangan model :

Schooling mempengaruhi pendapatan

Earning Function :• Male :

• Female :

MMMM Sw

FFFF Sw

M menyatakan pendapatan pria meningkat bila mendapatkan tambahan 1 tahun pendidikan.

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Measuring Discrimination

Model Regresi :

FFFMMMFM ssWWW _________

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Measuring The Impact of Discrimination on the Wage

M

F

___

FW

Dollars

Schooling

Women’s Earning Function

___

MW

*Fw

__

Fs__

Ms

Men’s Earning Function

Women’s Schooling

Women’s Earning

Men’s Schooling

Men’s Earning

Measure Discrimination :*Fw

___

FWWoman’s Earning

Men’s Earning

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

0.541940 1950 1960 19701930 1980 1990

Year

0.57

0.60

0.63

0.66

0.69

0.72

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Global Gender Gap 2007

INDONESIA

Rank 2007 : 81Score 2007 : 0.6550 ( 1 = equality )

Rank 2006 : 68Score 2007 : 0.6541( 1 = equality )

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Global Gender Gap 2007

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Global Gender Gap 2007

INDONESIA

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