Question

Assume that ‘comparable worth’ laws are imposed that will require government and large private employers to increase the wages they pay in female dominated jobs. The law will not apply to small firms. Analyze the effects on earnings inequality among women. (This will require a discussion of - among other things - the effects of firm size on wages and of wages in female dominated jobs.)

Answer 1

The law will raise earnings of women in large firms. They will be comparable to men. But there will be inequality. Women working in small firms will not get comparable wages. Their wages will be less than their counterparts in large firms. More women will prefer to work in large firms. There will be some movement of women from small firms to large firms. This will also raise wages to some extent in small firms. But given the fact that women in small firms can't find easily jobs in large firms as they do not possess all required skills for the job, wages in small firms will continue to remain low