Labor Economics Series LABOR MARKET DISCRIMINATION Tokoh Pejuang

Labor Economics Series LABOR MARKET DISCRIMINATION

Tokoh Pejuang Wanita Indonesia Raden Adjeng Kartini 21 April 1879 – 17 September 1904 2

Pemikiran Raden Adjeng Kartini Adanya keinginan untuk memperbaiki kondisi kaum wanita yang disebabkan kungan adat, antara lain : • Dunia wanita hanya sebatas tembok rumah. • Tidak bebas mendapatkan akses pendidikan. • Dipingit dan dinikahkan dengan pria yang tidak dikenal. 3

Fakta di Indonesia 4

Penduduk yang Bekerja (2007) 5

Penduduk yang Bekerja (2007) Jenis Pekerjaan Utama JENIS KELAMIN Jumlah Pria 1. 945. 78 Tenaga Profesional 2 6 Wanita 1. 857. 339 3. 803. 121 Kepemimpinan 310. 089 57. 295 367. 384 Tata Usaha 2. 608. 94 7 1. 383. 556 3. 992. 503 TU Penjualan 8. 590. 67 3 8. 046. 116 16. 636. 789 TU Jasa 3. 351. 69 7 2. 992. 762 6. 344. 459 TU Pertanian 26. 479. 1 75 15. 753. 497 42. 232. 672 Produksi 18. 446. 4 65 23. 771. 833 5. 325. 368

Rata-rata Upah (2006) 7

Rata-rata Upah (2006) SEKTO R 8 LAPANGAN PEKERJAAN PRIA WANIT A 1 Pertanian, Kehutanan, Perburuan, Perikanan (Agriculture, Forestry, Hunting, Fishery) 438. 149 234. 586 2 Pertambangan, Penggalian (Mining and Quarrying) 1. 541. 2 41 771. 415 3 Industri Pengolahan (Manufacturing Industries) 826. 257 583. 768 4 Listrik, gas dan air (Electricity, Gaz and Water) 1. 176. 1 60 1. 338. 73 7 5 Bangunan (Construction) 734. 070 1. 073. 57 3 6 Perdagangan Besar, Rumah Makan & Hotel (Wholesale Trade, Restaurant & Hotel) 806. 110 621. 248 7 Angkutan, Pergudangan dan Komunikasi (Transportation, Storage & Communication) 934. 761 944. 419 8 Keuangan, Asuransi, Jasa Perusahaan (Financing, Insurance, Business Services) 1. 422. 2 52 1. 461. 92 6 9 Jasa Kemasyarakatan (Public Services) 1. 126. 5 59 789. 557

Penduduk yang Bekerja Berdasarkan Jam Kerja Tahun 2007 9

Konsep Diskriminasi 10

Konsep Diskriminasi George Borjas : Differences in EARNINGS and EMPLOYMENT OPPORTUNITIES among equally skilled workers employed in the same job simply because of the worker’s race, gender, national origin, sexual orientation, or other seemingly irrelevant characteristics. 11

Konsep Diskriminasi Discrimination means treating people differently and less favourably because of characteristics that are not related to their merit or the requirements of the job. These include race, colour, sex, religion, political opinion, national extraction and social origin. 12

The Discrimination Coefficient 13

The Discrimination Coefficient Lauched for the first time by Gary S. Becker The Economics of Discrimination (1957) 14

The Discrimination Coefficient • Basic Concept : Taste Discrimination • Assumption Two types of workers : • White workers : wage w. W • Black workers : wage w. B 15

The Discrimination Coefficient • If the employer is prejudiced againts black, employer gets disutility from hiring black workers. • Disutility : employer will act as if costs for black worker w. B (1 + d), where d is positive number and is called : The Discrimination Coefficient 16

The Discrimination Coefficient • Suppose that w. B = $10, and that d =0, 5 ; the employer will then act as if hiring a black worker costs $ 15 • The greater the prejudiced, the greater is the disutility from hiring black workers, and the greater is the discrimination coefficient d. 17

The Discrimination Coefficient • If these black employers prefer to hire black workers, they will act as if hiring a black worker is cheaper than it actually is. Nepotism Coefficient w. B (1 – n ) 18

Labor Market Discrimination Analysis 19

Employer Discrimination 20

Skill and Labor Market Outcomes (2001) WHITE 21 BLACK HISPANIC Male Femal e Highschool Graduate or more (Percent) 84. 3 85. 2 78. 5 78. 9 56. 1 57. 9 Bachelor’s degree or more (Percent) 29. 1 25. 4 16. 4 17. 5 11. 0 11. 2 Labor Force Participation Rate (Percent) 79. 9 59. 9 72. 1 65. 2 83. 8 59. 3 Unemployment Rate (Percent) 4. 7 3. 6 8. 0 7. 0 5. 2 6. 6 Annual Earnings (in $1, 000) 49. 8 29. 6 33. 5 26. 0 30. 8 22. 3 Annual Earnings (Full Time) 55. 4 37. 1 38. 5 30. 8 34. 3 28. 0

Fact : White Wage > Black Wage 22

Employer Discrimination • Assumption : White Workers and Black Workers are Perfect Subtitutes in Production. • Firms’s output depends on the total number of workers hired, regardless of their race have the same Marginal Product of Labor ( MPE ) 23

Employer Discrimination Production function: q = f ( EW + EB ) q firm’s output EW number of white workers hired EB 24 number of black workers hired

Employment in a non Discriminatory Firm 25

Employment in a non Discriminatory Firm • Both groups of workers have the same Value of Marginal Product, a non discriminatory firms will hire whichever group is Cheaper • Suppose that w. W > w. B , a firms that doesn’t discriminate will hire black workers up to the point where w. B = VMPE 26

The Employment Decision of a Firm That Does Not Discriminate Dollar VMPE Black workers wage is less than w. B = VMPE white wage How many worker will be hired. . ? ? Employment 27 ?

Employment in a Discriminatory Firm 28

Employment in a Discriminatory Firm • The employer act as if black wage is not w. B , but instead equal to w. B (1 + d). Where d is discrimination coefficient. • The employer’s hiring decision based on a comparison w. W and w. B (1 + d) – Hire only blacks if w. B (1 + d) < w. W – Hire only white if w. B (1 + d) > w. W 29

Employment in a Discriminatory Firm • As long as black and white workers are perfect subtitutes, firms have a segregated workforce. • Employer’s who have little prejudice and hence have small discrimination coefficient, will hire only BLACKS (called “Black Firm”). • Employer’s who are very prejudice and have very large discrimination coefficient, will hire only WHITES (called “White Firm”). 30

Employment in a Discriminatory Firm WHITE FIRM • The white firm hires workers up to the point where : w. W = VMPE • Assumption : w. W > WB • The white firm is paying an excessively high price for its workers and hires relatively few workers ( ) 31

The Employment Decision of a Prejudiced Firm Dollar White Firm VMPE Employment 32

Employment in a Discriminatory Firm BLACK FIRM • Non discriminatory firms : w. B = VMPE • If discrimination coefficient d 0 : – Price of Black Labor w. B ( 1 + d 0 ) – Amount of Labor hired : w. B ( 1 + d 0 ) = VMPE 33

Employment in a Discriminatory Firm BLACK FIRM The number of black workers hired, therefore, is smaller for firms that have larger discrimination coefficient. 34

The Employment Decision of a Prejudiced Firm Dollar Discrimination Coefficient Black Firm VMPE Employment 35

Discrimination and Profits 36

Discrimination and Profits Firms that discriminate lose on two counts : • The prejudiced employer could have hired the same number of black worker at lower wage. Because black and white workers are perfect subtitutes. • Discriminatory black firms are hiring too few workers ( or ) they are giving up profits in order to minimize contact with black workers. 37

Profit and Discrimination Coefficient Dollar max Max Profit w Black Firm 0 38 White Firm dw Discrimination Coefficient

Discrimination and Profits The Most Profitable Firm Zero Discrimination 39

Labor Marker Equilibrium 40

Discrimination and Profits • Firm dengan Discrimination Coefficient : – Rendah – Tinggi cenderung Black Firm cenderung White Firm • Asumsi : Supply Black Worker Perfectly Inelastic sejumlah N Black person tidak terpengaruh tingkat upah. 41

Labor Market Equilibrium Black-White Wage Ratio S D’ 1 R D 0 42 N Black Employment

Employee Discrimination 43

Employee Discrimination • Diskriminasi dilakukan oleh “Fellow Worker” • Misal : White worker yang bekerja pada Black Firm dengan upah w. W akan merasa mendapat upah w. W (1 - d). • Tidak berpengaruh terhadap “Profitability of Firms” karena white worker dan black worker adalah perfect subtitutes sehingga firm membayar jumlah upah yang sama. 44

Customer Discrimination 45

Customer Discrimination • Dikemukakan oleh Harry J. Holzer dan Keith R. Ihlanfeldt (1998) research di Atlanta, Boston, Detroit dan Los Angeles. • Keputusan membeli tidak ditentukan oleh Actual Price ( p ) tapi oleh The Utility. Adjusted Price p (1 + d). • Employer dapat mengatur tenaga penjualan sesuai kondisi. 46

Customer Discrimination TYPE FIRM > 75 % WHITE CUSTOMER PERBEDAAN Customer & worker bertemu 58, 0 % 9, 0 % 49, 0 % Customer & worker tidak bertemu 46, 6 % 12, 2 % 34, 4 % - - 14, 6 % Perbedaan 47 > 50 % BLACK CUSTOMER

Customer Discrimination and NBA Lawrence Kahn and Peter Sherer 1998) : A study of attenance records indicates that replacing a black player with an eqqually talented white player bring in about 9, 000 additional fans per year. At $50 a head (a very conservative estimate of ticket prices and concession revenues), the racial switch would increase annual team revenues by roughly $450, 000 48

Measuring Discrimination 49

Measuring Discrimination Asumsi : Tenaga kerja terdiri dari • Male, dengan average wage • Female, dengan average wage Diskriminasi : selisih average wage, yaitu : 50

Measuring Discrimination Pengembangan model : Schooling mempengaruhi pendapatan Earning Function : • Male : • Female : menyatakan pendapatan pria meningkat bila mendapatkan tambahan 1 tahun pendidikan. 51

Measuring Discrimination Model Regresi : 52

Measuring The Impact of Discrimination on the Wage Dollars Men’s Earning Function Men’s Earning Women’s Earning Function Measure Discrimination : Woman’s Earning Women’s. Men’s Schooling 53