Question

HouseholdGroupAnnual IncomeSex of Head of Household

#1$65,000Female

#2$43,000Male

#3$48,000Female

#4 $52,000Male

#5$40,000Male

#6$52,000Female

#7$45,000Male

#8$42,000Female

#9$63,000Male

a.Is there an earnings gap based on sex in this neighborhood?

b.If there is an earnings gap, does it favor female or male headed households?

c.If there is an earnings gap, can you conclude that it is due to sex-based labor market

discrimination? Why or why not? Be specific.

Answer 1

a) There is an earnings gap in this neighborhood based on sex. The average income of the Males is $48,600 and that of the females is $51,750.

b) The earnings gap favors female-headed households as the average earning of a female-headed household is more than that of a male-headed one.

c) After calculating the standard deviation for female-headed household = 9.74 and that of male-headed household = 9.18, we can see that there is clear discrimination against males in the neighborhood. In female-headed households, the mean is high but the incomes are concentrated and for male-headed households, the mean is less and the incomes are varied over a wide range.