How to Study for Chapter 24 Labor Market IssuesObjectives for Chapter 24 Labor Market IssuesChapter 24 Labor Market Issues (latest revision July 2006)Case 1: Discrimination in Labor MarketsTest Your UnderstandingCase 2: ImmigrationMigration between Mexico and the United StatesTest Your UnderstandingCase 3: Labor UnionsCase: Industrial Relations in California AgriculturePractice Quiz on Chapter 24How to Study for Chapter 24 Labor Market IssuesChapter 24 continues the analysis of labor markets. It uses the tools developed earlier to analyze discrimination, immigration issues, and labor unions. Only one of these issues will be covered inthe class.1. Begin by looking over the Objectives listed below. This will tell you the main points you should be looking for as you read the chapter.2. New words or definitions and certain key points are highlighted in italics and in red color. Other key points are highlighted in bold type and in blue color.3. You will be given an In Class Assignment and a Homework assignment to illustrate the main concepts of this chapter. 4. There are a several new words in this chapter. Be sure to spend time on the various definitions. There are no new graphs. 5. The teacher will focus on the main technical parts of this chapter. You are also responsible for the cases and the ways by which each case illustrates a main principle.6. When you have finished the text, the Test Your Understanding questions, and the assignments, go back to the Objectives. See if you can answer the questions without looking back at the text. When you are ready, take the Practice Quiz for Chapter 24.Objectives for Chapter 24 Labor Market IssuesAt the end of Chapter 24, you will be able to answer the following questions:1. What is “wage discrimination”? What is “occupational discrimination”?2. Explain the “overcrowding model”? Explain Becker’s “tastes for discrimination” model.3. Explain the provisions of the most important anti-discrimination laws of the United States.4. What is affirmative action? What arguments can be made in favor of it and against it? What does the evidence show?5. Describe the trends in the amount and the composition of immigration to the United States and to California.6. Briefly describe American immigration policies.7. How well have immigrants fared in the United States? What effects have they had on American natives?8. Who are the Mexican migrants to California (describe their characteristics)? Why do they migrate? What effects have they had on the California economy? How well have they done?9. Name the three levels of labor union organization and explain what each level does.10. Explain the difference between a “craft union” and an “industrial union”.11. What is meant by a “closed shop”, an “open shop”, a “union shop”, an “agency shop”12. Name the arguments for and against the passage of right-to-work laws.13. Name the various goals that a labor union might pursue and explain how it would go about trying to achieve its goals. Explain the forces that are likely to determine whether a labor union will be successful in achieving its goals.14. Explain the effects of unions on wages/benefits, equality, stability, productivity, and profits.15. Explain why the proportion of workers belonging to a labor union has been declining.1Chapter 24 Labor Market Issues (latest revision July 2006)This is an optional chapter. Part or all of this chapter may not be assigned by the instructor. There are many issues involving labor markets that we could analyze. Some, such as the minimum wage and the earnings gap between men and women, have already been considered. Others, such as poverty, will be considered later. In this chapter, let us consider three significant labor market issues. The first will be discrimination in labor markets and the role of affirmative action. The second will be immigration. And the third will be labor unions.Case 1: Discrimination in Labor Markets Because different people paid different wages does not mean that there is discrimination. To have what we will call “wage discrimination”, different people must be paid different wages despite having the same productivity. The problem is that individual productivity is very hard tomeasure. Therefore, we say that “wage discrimination” exists if different people receive different wages despite having the same productive characteristics. The productive characteristics usually considered include age (as a measure of overall work experience), experience with the current employer (as a measure of specific skills), education, and occupation. In other words, we try to find people in the same occupation whose age, experience, and education are similar. When we do this, we do find that there are pay differences between men and women and also between whites and minorities. For example, studies have found that gender differences in formal education, experience, and occupation tend to explain about 2/3 of the earnings difference between men and women. So if women, on average, earned 30% less than men, approximately 2/3 of this (20%) would be due to differences in education, experience, and occupation. The other 1/3 (10%) cannot be explained. While this 10% may be due to aspects that are difficult to measure, such as motivation, it is often consideredto be the result of wage discrimination against women. Interpreting these numbers is very difficult for several reasons. First, the numbers suggest that women are paid less than men in part because of differences in formal education and in part because of discrimination. However, if women believe that there will be discrimination against them (and, according to surveys, over half of women do believe this), they may be less likely to obtain the amount and type of formal education that men obtain. Thus, there is a feedback effectat work. If wage discrimination against women were eliminated, women’s earnings would rise inpart because of the elimination of the discrimination and in part because of the incentive to obtain more formal education. Second, interpreting these numbers is very difficult because the numbers suggest that women are paid less than men in part because of discrimination and in part because they are in different occupations. Yet, the discrimination against women may come specifically in preventing them from being in certain occupations.