Lecture on Pay Discrimination by Dr. YJN

Jul 12, 2024

Lecture on Pay Discrimination by Dr. YJN

Key Concepts

Definitions

  • Equality: My outcome (O_m) being the same as others' outcome (O_o).
    • Example: Equality in pay means everyone gets paid the same amount.
  • Equity: My outcome to input ratio being the same as others' outcome to input ratio.
    • Example: Higher performance leads to higher pay.
  • Discrimination: Like equity but with systematic input to output ratio based on socially unjust factors.
    • Example: Differential pay based on gender, age, etc.

Pay Inequality vs. Discrimination

Determining Pay Inequality

  • Compare raw pay differences between groups.
  • Example: Average pay of males vs. females.
  • Example of detecting pay inequality: Simple linear regression showing females earn $12,000 less annually than males.

Arguments Against Pay Discrimination

  • Speaker claims no gender wage gap after adjusting for factors like education and occupation.
  • Holding constant factors like occupation and education removes the pay difference.
  • Necessary to investigate potential discrimination in higher education and occupation fields.

Steps to Assess Pay Discrimination

Step 1: Examine Raw Pay Difference

  • Conduct simple linear regression to compare pay between groups.

Step 2: Identify Reasons for Pay Difference

  • Use multiple linear regression to identify factors affecting pay differences (e.g. tenure, shift type, performance).
    • Example analysis sequence:
      • Adding organizational tenure: No significant change in pay difference.
      • Adding shift type: No significant change in pay difference.
      • Adding performance: Pay difference disappears, indicating performance as the factor.
  • Conclude that higher male performance justifies higher pay according to the data analyzed.

Step 3: Investigate Potential Discrimination in Influencing Factors

  • Investigate potential discrimination in performance appraisal, tenure, shift type, etc.

Example Case Study

  • Analysis of a chemical company's production line with 188 employees.
  • Factors analyzed: Annual salary, gender, organizational tenure, shift type, performance appraisal.

Final Thoughts

  • No raw pay difference does not imply no pay discrimination.
    • Example: Women outperforming men but receiving the same pay can indicate discrimination.

Summary of Process

  1. Investigate raw pay differences using simple linear regression.
  2. Identify factors for pay differences using multiple linear regression.
  3. Investigate any discrimination in the factors influencing pay.
  • Important note: Multiple factors beyond just occupation and education could be behind pay discrimination.

Exercise and Assignment

  • Conduct similar analysis and investigate further.
  • Think critically about the implications of the data and any underlying discrimination.

Discussion Question

  • Does no raw pay difference mean no pay discrimination? Consider counter-examples and implications.

Conclusion: Research and think critically about pay discrimination factors and make nuanced, data-backed conclusions.