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SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F.

MONTALBO

Issue #

Sex
Differential
Submitted by:
Ms. Agnes F.
Montalbo

Sex earnings differentials are the


measured earnings gaps between
male and female workers. These
gaps are customarily expressed in
terms of either proportionate
(percentage) differences or ratios.
Thus the absolute difference in
average earnings between men
and women can be expressed as a
percentage of either the average
earnings of men or the average
earnings of women. Alternatively,
the sex earnings gap can be
measured as the ratio of male
(female) average earnings to
female (male) average earnings.
Because
proportionate
differences and ratios abstract
from the units of measurement,
these
measures
facilitate
international comparisons of sex
earnings
differentials
and
comparisons across different
rates of pay, for example, hourly
or annual rates. The universal
existence of sex earnings
differentials has elicited several
competing,
though
not

such characteristics as age.


employment status, race, and
occupation. The proliferation of
such studies is especially evident
in the United States. A standard
methodology
for
analyzing
observed
sex
earnings
differentials has been developed.

I.

necessarily mutually exclusive,


explanations
from
social
scientists. Much of this effort has
been associated with economists.
Their hypotheses can be grouped
into the following general
categories: (a) personal and
societal tastes. (b) labor market
structure.
(c)
imperfect
information,
and
(d)
sex
differences in labor market skills.
Numerous studies have been
conducted in order to quantify
sex
earnings
differentials
amongst workers classified by

ECONOMIC THEORIES

Income distribution is a subject


that has traditionally aroused a
great deal of interest and concern
among industrialized societies.
Earnings inequality is a special
case of the income distribution
question as it is exclusively
concerned with income derived
from the sale of labor services. In
turn the topic of sex earnings
differentials is a special case of
earnings inequality in that the
focus is on earnings inequality
attributable to a worker's gender.
In many instances economic
theories
of
sex
earnings
differentials are derived from
more general theories of earnings

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

differentials or from theories


originally developed in the
context of racial earnings
differentials.

1.1 TASTES
This approach explains the sex
earnings differential as the
outcome of personal tastes
among various economic agents
regarding the appropriate terms
on which women may participate
in the labor market. The basis for
this approach was originally
developed by Becker in the
context of racial and ethnic
earnings differentials (Becker
1971). The Becker model adopts
the
basic
optimization
assumption
of
neoclassical
economics, which views the goaldirected activities of economic
agents as the result of seeking to
maximize some index of an
individual's
satisfaction.
In
Becker's model the principal
economic agents are employers,
workers,
and
consumers.
Discrimination
against
a
particular demographic group is
manifested as a desire to avoid
certain economic transactions
with members of the group. A
discriminator acts as if the total
cost of the transaction exceeds
the nominal cost. The psychic
cost of the transaction is defined
as the difference between the
perceived total cost and the
nominal cost. A discriminator
would be willing to forfeit some
income in order to avoid the
transaction. The greater the
desire to discriminate, the greater
the psychic cost and therefore the
greater the amount of income the

individual would be willing to


forfeit in order to avoid the
transaction. In principle the
intensity of an individual's taste
for discrimination is measured by
a discrimination coefficient that is
defined as the proportionate
difference between the perceived
total cost of the transaction and
the nominal cost. Given a
distribution of discrimination
coefficients among economic
agents, Becker's approach holds
that the forces of competition
ameliorate the effects of tastes
for discrimination on earnings
differentials. Under competition,
employers
with
smaller
discrimination
coefficients
expand relative to those with
higher ones because the former
have lower costs and forgo less
profit than the latter. Since
gender is less important than
genuine
productivity
considerations, labor market
discrimination against women is
lessened by the expansion of less
discriminatory
firms.
Consequently, the sex earnings
differential is less than it would
otherwise
be.
Another
implication of the Becker model is
that an increase in the relative
numbers of women in the labor
force will tend to widen the sex
earnings differential. An increase
in the relative supply of female
workers means than women arc
less able to avoid dealing with
economic agents with relatively
high discrimination coefficients.
In order for the additional female
workers to be absorbed into the
work force they must seek
employment with the more
discriminatory economic agents.

This in turn can occur only if


women accept lower relative
wages. Hence sex earnings
differentials will rise even though
there has been no change in the
distribution of discrimination
coefficients among economic
agents.

1.2 LABOR MARKER STRUCTURE


Under certain circumstances a
departure from the economist's
notion of perfect competition can
generate pecuniary gains to the
practice
of
labor
market
discrimination. Thus the structure
of the labor market itself can
create profitable opportunities
from the practice of sex
discrimination.
Within
this
conceptual
framework,
sex
earnings differentials that are not
based on sex differences in
productivity can arise even in the
absence
of
tastes
for
discrimination. In the study of
market structure the term
"monopsony" is used to describe
a market dominated by a single
buyer or group of buyers acting in
collusion. A lack of competition
on the demand side of a labor
market is a form of monopsony.
This situation arises when there is
a single employer or a group of
employers acting in collusion with
reference to a given labor market.
A
monopsonistic
employer
understands that it is possible to
influence the prevailing wage rate
through his or her employment
practices. A profit maximizing
condition for any employer is that
labor be employed up to the point
where the last unit of labor
employed adds as much to the

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

firm's revenues as it adds to the


firm's costs (marginal cost equals
marginal revenue). The most
fortunate set of circumstances for
a monopsonistic employer is one
in which he or she is able to make
a separate wage bargain with
each worker. With the exception
of the last worker hired, each
worker would receive a wage less
than his or her contribution to the
firm's revenues. White it is not
often feasible to completely
segment the work force through
separate wage bargains, it may
be reasonably easy to achieve a
partial segmentation based on
gender. If the percentage labor
supply response to a given
percentage change in the wage
rate were less for women than for
men, it turns out that a
monopsonistic employer could
maximize profits by paying
women a lower wage than that
paid to men of comparable
productivity. The resulting sex
earnings differential need have
nothing to do with tastes for
discrimination. There are a
number of avenues by which
female labor supply elasticities
can come to be lower than those

of males. Many of these avenues


are believed to be manifestations
of male monopoly power
(Madden 1975). One example is
that of an all-male trade union
which sets a wage floor that does
not cover women in a
monopsonistic labor market. In
what would otherwise be
competitive labor markets, sex
segregation in jobs can protect
males from competition with
equally productive females. The
restriction of women to a
narrower range of occupations
would result in effectively lower
labor supply elasticities for
female workers. Occupational
segregation can be enforced
through ''protective" legislation
that makes very restrictive the
terms on which women can be
employed.
Such
legislation
effectively enforces a tacit
collusion among employers by
preventing individual employers
from
breaking
ranks
and
expanding the employment of
women in certain occupations
where their initial lower wage
demands would be an advantage
over comparably qualified males.
The
occupational
crowding

hypothesis of sex earnings


differentials has been refined and
advanced by the work of
Bergmann (1974). Restricting
women to a relatively narrow
range of occupations artificially
lowers the value of labor services
in these occupations and raises
the value of labor services in
male-dominated
occupations.
Since wages for comparably
qualified workers vary little within
occupations,
sex
earnings
differentials arise as a result of
occupational wage differentials.
While there may be little or no
earnings differentials between
men and women in femaledominated occupations, this need
not be the case in maledominated occupations. In maledominated occupations, the wage
demands of women would tend
to be lower than those of men
because the market alternatives
faced by women are less
attractive. Societal and legal
pressures prevent the erosion of
sex earnings differentials in maledominated
occupations
by
impeding
the
wholesale
employment of women in these
occupations.

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

1.3 IMPERFECT INFORMATION


Employment decisions always
involve
some
degree
of
uncertainty regarding the future
productivity
of
individual
workers. This uncertainty can be
reduced
by
information
pertaining
to
a
worker's
education, previous employment
record, test scores, and so on.
Employers may also believe that
the sex of a worker conveys some
information about a worker's
future productivity. When wages
are set on the basis of expected
future productivity, sex earnings
differentials will arise as a result
of sex-based predictions of future
productivity. Employers may
believe that women are less
productive in some jobs than men
with the same observable
characteristics. Even if employers
believed this to be true only on
average,
sex
earnings
differentials would still arise.
Individual women would be
judged on the basis of perceived
group characteristics rather than
individual merit. A profitmaximizing employer may not
find it worthwhile to incur the
costs of finding out more about a
particular individual's probable
future productivity. Thus, there
would be instances in which
women would be offered lower
wages even though their
productivity (ex-ante) was equal
to that of the men. Depending
upon the jobs offered to women,
there may be little opportunity
for employers to revise their
appraisals of female workers. Sex
earnings differentials could arise
even in the case where women
have the same productivity

distribution as men. This could


occur if objective measures of
probable productivity were more
variable in their predictive
accuracy for women than for
men.
Risk-averse,
profitmaximizing employers would
offer women workers lower
wages and/or less attractive
employment to compensate for
the increased risk. This approach
has sometimes been referred to
as
statistical
discrimination
(Aigner and Cain 1977).

1.4 SEX DIFFERENCES IN LABOR


MARKET SKILLS In this view, sex
earnings differentials stem mainly
from sex differences in labor
market skills. These sex-based
productivity differentials are held
to be largely the result of human
capital investment decisions
among workers rather than
innate sex differences in abilities.
The unique maternal and family
responsibility roles of women are
believed to account for malefemale differences in human
capital investments. The child-

bearing and traditional family


responsibilities of women lead
them to anticipate spending less
time in the labor force over the
life cycle than men. Female labor
force participation is expected to
be intermittent over the life cycle
and
especially
subject
to
disruption during a woman's
child-bearing years. Under the
circumstances, it does not pay
women, on average, to invest as
much as men in job skills. In
addition to the shorter period
over which to recoup one's
investment, there is also the loss
of prior accumulated skills during
periods spent out of the labor
force. The rational response is for
a woman to enter an occupation
with few skill requirements or at
least one in which skill
depreciation is relatively modest.
Women who are employed in
occupations characterized by
ample opportunity for investment
in on-the-job training will on
average invest less than men
(Polachek 1975). This approach
then seeks to account for the con-

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

centration of women in lower


paying occupations and in the
lower end of higher paying
occupations. In addition to the
effect of lower wage rates on the
sex earnings differential, there is
also the effect of lower annual
hours of work among women.
The latter effect stems from
competing family responsibilities.

There are three basic concepts


underlying the Global Gender
Gap Index, forming the basis of
how indicators were chosen, how
the data is treated and the scale
used.
First, the Index focuses on
measuring gaps rather than
levels.
Second, it captures gaps in
outcome variables rather than
gaps in input variables.
Third, it ranks countries
according to gender equality
rather
than
womens
empowerment.
The Index is designed to
measure gender-based gaps
in access to resources and

opportunities in countries
rather than the actual levels
of the available resources and
opportunities
in
those
countries.
The Index penalizes or
rewards countries based on
the size of the gap between
male and female enrolment
rates, but not for the overall
levels of education in the
country.

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

Outcomes

vs.

inputs

For example, the Index includes


an
indicator
comparing
the gap between men and
women in high-skilled jobs such
as legislators, senior officials and
managers (an outcome indicator)
but does not include data on the
length of maternity leave (a
policy indicator).
Gender equality vs. womens
empowerment
it ranks countries according to
their
proximity
to gender equality rather than
to womens empowerment
the Index rewards countries
that reach the point where
outcomes for women equal
those for men, but it neither
rewards nor penalizes cases in
which
women
are
outperforming
men
in
particular indicators in some
countries.
Thus a country that has higher
enrolment for girls rather than
boys in secondary school will
score equal to a country where
boys and girls enrolment is the
same.
Four Sub-index
Economic Participation and
Opportunity,
Educational Attainment,
Health and Survival and
Political Empowerment.

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #
This picture caption uses the Caption 2
paragraph style and is inside a text box
so that you can move it easily as
needed to accompany a photo.

To setup a document for multiple column


text, on the Page Layout tab, in the Page
Setup group, click Columns and then click
the number of columns you need. You can
also click More Columns to specify column
widths, the space between columns, or to
automatically add a vertical line between
columns.
To change the number of columns for just
part of the document (or if you want text to
wrap to just the top part of the page and a
new article to start below as shown on this
page), insert a section break before the
position where you want to start the new
column layout. To do this, on the Page
Layout tab, in the Page Setup group, click
Breaks and then click the type of section
break you need.

Select a section break


When changing many types of page layout
formatting for just part of the document
such as paper size, margins, or orientation,
the best section break type to use is a Next
Page section break because it automatically
starts the new section on a new page.
However, when changing the number of
columns as you might in this newsletter, you
may prefer to select a Continuous break. The
continuous section break (used a few times
throughout this template) starts a new
section immediately after the preceding one.
So, for example, you can have a threecolumn article followed by a four-column
article, on the same page.

Working with Columns


by [Article Author]

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

HEADING 4

Caption 2 style is used to add


picture captions. Captions are in
text boxes for easy placement
relative to images.

Sidebar Setup
The sidebars in this template use simple, single-row
tables for the gray-shaded headings and
thermometer charts shown below for easy alignment.

Formatting Tips
by [Article Author]

This placeholder article provides the


following tips:

Add Sidebar Content


Adding content into a column to create a sidebar is no
different from adding text. As noted earlier in this
template, apply the styles provided for headings,
sidebar text, and even pictures to align them quickly and
easily.

FAST FACTS

68%
Learn about these thermometer charts in the article at
right.

42%

Creating thermometer charts using


tables, as shown at left.

Setting up multipage articles.

Wrapping text around images

Adding article titles and bylines

Creating the sidebar


thermometer charts
When you work in Word 2010 (or PowerPoint
2010), you have the full power of Excel 2010
charts (provided that Excel is installed on
your computer). Insert a chart in Word from
the Insert tab, in the Illustrations group.
Charts are easy to create and use and
automatically coordinate with your active
document theme.
However, notice in the sidebar at left that the
thermometer charts were created using
single-row Word tables. This is because they
automatically fit the tight space without
having to remove any chart elements. And
you might be surprised to learn that its easy
to make them essentially mathematically
accurate.

Cras ut blandit diam. Suspendis quis urna semper


aliquam.

To use a table as a thermometer chart, do


the following:

FOR MORE INFORMATION

1.

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HEADING 5

Contact Info

2.

On the Insert tab, in the Tables group,


click Table and then drag across the grid
to select the first two cells in the first
row. Click to insert a two-cell, one-row
table.
Click in the table and then, on the Table
Tools Layout tab, in the Table group,
click Properties.

3.

On the Columns tab of the Table


Properties dialog box, change the
Measure In setting to Percentage. You
can then set the percentage to up to one
decimal point in accuracy.

Setting up multipage articles


Word is designed to allow text to
automatically flow from one page to the
next. So, when you want an article to
continue on the next page, just keep typing.
In the case of this placeholder article, it is
separated into two placeholder content
controls (one on this page and another that
starts at the top of the following page) just so
that you can still see the layout of the
following page while you begin adding your
own text on this page. As
mentioned on the first page of
this template, remember that it
might look like the layout is
skewed when you
replace a long piece of
placeholder text by
starting to type your
own, but it is not. As you
add your content, the
layout that follows will
move down
automatically and
back into position.
To remove the second
placeholder control that starts immediately
following this one, just select it and then
press any key. You can then continue typing
from this page and your text will
automatically flow onto the next.

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

Wrap text around images


The photos in this article that are angled with
white borders are floating images. That is,
they are setup for text to wrap around
themwhich is why they can span multiple
columns in a three-column section.
Additionally, as mentioned earlier, the photo
of the young woman in the body of this
article is set to wrap text so that text will flow
around the image as you add your own text.
To select text wrap settings, start by
selecting the image and then do the
following:
1.

On the Picture Tools Format tab, in the


Arrange group, click Wrap Text and then
select either Square, Tight, or Top and
Bottomdepending on how you want
the text to wrap.
You might be happy with the default
behavior as soon as you do this.
Otherwise, continue to step two for

2.

To set a specific position or control


behavior (such as whether or not the
image moves with text), on the Picture
Tools Format tab, in the Arrange
group, click Position and then click
More Layout Options.

On the Text Wrapping tab of the


Layout dialog box, you can set a specific
distance from the image for text to wrap
and control whether text can wrap on
both sides, one side only, or just above
and below the image.

On the Position tab of that dialog box,


you can set a specific position for the
image on the page and select or clear
the option to allow the picture to move
with text.

Adding article titles, bylines,


and dividers
The article titles and bylines for this
newsletter are created in text boxes. This is
because text can wrap around a text box just

orange divider bars that you see on pages


containing more than one article are shapes
set to wrap text. So, these text boxes and
shapes can easily span multiple columns
without having to insert a section break or
change the number of columns for just that
portion of the page.
When you select a text box or a shape, on the
Drawing Tools Format tab, in the Arrange
group, you have the same settings for text
wrapping and positioning that are described
above for wrapping text around pictures.
Note that, because text is set to wrap around
the orange divider bars, your article might
appear to slip below or above a bar,
depending upon length. To adjust the
position of a divider bar shape to
accommodate the length of your articles,
just select the shape and then use the up and
down arrow keys on your keyboard to nudge
it to the proper position.

Remove Image
Backgrounds
by [Article Author]

customization options.
Notice the image of the young woman thats
within a text column on the preceding page.
The background has been removed from that
image to allow text to wrap directly around
the subject.
Office 2010 introduced several new and
improved picture formatting tools in Word,
PowerPoint, and Excel. Among those is the
Remove Background tool that you can use to
remove backgrounds from your own images,

like it can around a


picture. Similarly, the
similar to the sample
image on the
preceding page.
To do this in Word, first
insert your image into
the document (on the
Insert tab, click
Picture), and then
select it. Then, on the Picture Tools Format
tab, in the Adjust group, click Remove
Background.
The Remove Background feature
automatically displays what it believes to be
the central subject of the image. However,
its easy to adjust this if the immediate result
is not what you need.
On the Background Removal tab, click Mark
Areas to Keep or Mark Areas to Remove
and then drag your mouse pointer in a line
across the portion of the image you want to

add or remove. When you are finished


making adjustments, click Keep Changes.
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SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

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10

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by [Article Author]

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Suspendisse vel purus nec erat pellentesque
commodo. Aliquam tempus aliquam mauris
vel dapibus. Nullam at metus erat, in
convallis massa. Aliquam erat volutpat.
Praesent ultrices odio in elit fringilla id
rutrum mi mattis.
Nullam at metus erat, in convallis massa.
Aliquam erat volutpat. Praesent ultrices odio
in elit fringilla id rutrum mi mattis. Aliquam
tempus aliquam mauris vel dapibus.

Lorem Ipsum
Nulla semper orci id leo adipiscing at pulvinar ante
porta. In quis orci orci, sed pellentesque dui. Aliquam
nec cursus augue. Sed est massa, ullamcorper vitae
gravida ut. Curabitur pretium eleifend lectus, at faucibus
lectus

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

Title Lorem Ipsum


Lorem ipsum dolor sit amet, consectetur
adipiscing elit. Nullam sed luctus tellus.
Pellentesque in dolor sapien, vitae dictum
massa. Aenean vitae lorem dui. Morbi
tempus lacinia nisi, vel scelerisque nibh
facilisis id. Integer urna tortor, ullamcorper
aliquet viverra non, mollis sed dolor.
Donec nunc velit, pretium eu pellentesque
eget, mollis vel arcu.
Suspendisse vel purus nec erat pellentesque
commodo. Aliquam tempus aliquam mauris
vel dapibus. Nullam at metus erat, in
convallis massa. Aliquam erat volutpat.
Praesent ultrices odio in elit fringilla id
rutrum mi mattis.
Duis purus eros, aliquam eu cursus tincidunt,
feugiat vitae magna. Etiam sodales
consequat nibh, eget rhoncus metus
convallis et. Morbi rutrum mollis facilisis.
Aenean faucibus

Sex
Differential
Submitted by:
Ms. Agnes F.
Montalbo

[Street Address]

Morbi tempus lacinia nisi, vel scelerisque


nibh facilisis id. Integer urna tortor,
ullamcorper aliquet viverra non, mollis sed
dolor. Etiam sodales consequat nibh, eget
rhoncus metus convallis et.
Phasellus dignissim nulla at diam fermentum
in sollicitudin sem condimentum.
Pellentesque condimentum diam et sem
rhoncus semper sed at libero. Aenean
condimentum, lorem vel faucibus
pellentesque, quam nunc lacinia augue, vel
sagittis dolor ipsum vitae velit. Ut feugiat
odio ac dolor iaculis consequat. Praesent sed
lacus ante. Nullam pretium commodo libero,
at congue sapien dignissim a. Cum sociis
natoque penatibus et magnis dis parturient
montes, nascetur ridiculus mus. In hac
habitasse platea dictumst. Vestibulum ante
ipsum primis in faucibus orci luctus et ultrices
posuere cubilia Curae; Ut fermentum sem
non metus faucibus blandit. Sed placerat
bibendum fermentum.

11

SEX DIFFERENTIAL SUBMITTED BY: MS. AGNES F. MONTALBO |


Issue #

[City, ST ZIP Code]

[Addressee]
[Street Address]
[City, ST ZIP Code]

12

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