4.1.6.7 Discrimination in the labour market Quiz: AQA Economics, Unit 1

The 20 questions

1. Wage discrimination occurs when:

   • Workers are paid according to their marginal product, so that each person receives a wage that reflects the output they add to the firm
   • All workers in an occupation are paid exactly the same wage
   • Employers pay higher wages to workers with more experience
   • Workers with the same productivity are paid different wages because of characteristics such as gender or ethnicity

2. Conditions necessary for wage discrimination include:

   • Perfect competition among employers with perfect information
   • Identical preferences across all employers and all workers, so that no one holds prejudices that could affect hiring or pay decisions
   • Equal pay enforced by law for all workers, which removes any scope for employers to set different wages for workers doing the same job
   • Employers with some market power and the ability to act on prejudice or preferences

3. Occupational segregation can contribute to a wage gap because:

   • Workers from some groups are concentrated in lower-paid occupations, so average pay for those groups is lower
   • Workers are paid the same across all occupations by law
   • It means employers pay higher wages to all women
   • Segregation raises the average wage of every group

4. Which is an example of discrimination in the labour market?

   • Paying a woman less than a man for identical work with equal productivity
   • Paying workers with more experience a higher wage
   • Paying workers less during a recession when firm revenue falls
   • Paying a higher wage to workers with a degree, which reflects the qualification that the employer has decided to value in each role

5. The impact of discrimination on employment may include:

   • Higher employment for every group since competition is reduced
   • Permanent equal distribution of jobs across all groups
   • Lower employment levels or restricted access to certain jobs for the affected group
   • No effect on employment since wages are the only issue

6. Employers pay £10 per hour to a group of workers while equally productive workers receive £12. What is the direct cost to the discriminated workers?

   • £12 per hour, the full wage of others
   • £2 per hour in lost wages for equal work
   • £10 per hour, since they are paid the market wage
   • £22 per hour in total for both groups

7. A firm's profits fall when it discriminates against qualified applicants. What does this suggest?

   • Discrimination always raises profits by reducing labour costs
   • Discrimination can be costly to employers because it reduces the pool of talent they can hire
   • Profits are unrelated to who the firm hires, since the productivity of its staff has no effect on the output or revenue the firm earns
   • Discrimination is only costly for workers, not firms, because the employer's profit depends only on sales and not on the staff it hires

8. A possible disadvantage of wage discrimination for the economy is:

   • Lower unemployment for every group of workers
   • Lower overall productivity, because talent is not allocated to the jobs where it is most valuable
   • Equal pay for all workers across the economy
   • Higher productivity because workers are matched to jobs by group

9. Why might competition reduce wage discrimination in the long run?

   • Competition has no effect because firms do not compete for labour
   • Non-discriminating rivals can hire the talent that discriminating firms overlook, which tends to erode discrimination over time
   • Competition makes discrimination legal in every market
   • Competition increases the wage gap as firms compete for workers

10. Which statement best illustrates a gender pay gap that is not all due to discrimination?

    • The whole average gap is caused by discrimination in every case
    • Pay gaps are always caused by productivity differences alone, so once productivity is measured no further gap can remain in any market
    • Differences in occupation choice and hours worked explain part of the average gap, so not all of it reflects discrimination
    • There is no gap in average pay between men and women in any country

11. Wage discrimination within an occupation differs from occupational segregation because discrimination within an occupation:

    • Means workers choose lower-paid jobs freely
    • Means workers in different occupations receive the same pay
    • Means equally productive workers in the same job receive different pay for reasons unrelated to productivity
    • Affects only employers, not workers

12. Assess the claim that ending wage discrimination would have no effect on economic efficiency.

    • It would reduce efficiency, since pay discrimination lowers costs for all firms
    • It would likely improve efficiency by letting talent be used where its productivity is highest, though the scale of the gain varies
    • It has no effect because productivity is unrelated to pay
    • It only affects consumers, not firms or workers

13. Ethnic discrimination in hiring means equally qualified applicants receive fewer interviews. This mainly affects:

    • Only the wages of employers who hire them
    • The national minimum wage directly
    • Nothing, since interviews are unrelated to employment, and the number of people invited to interview has no bearing on who gets a job
    • Employment opportunities for the group, as they are less likely to be hired

14. Which of these is a non-productivity factor that might cause wage differences?

    • The worker's years of relevant experience
    • The worker's qualification relevant to the job
    • The gender or ethnicity of the worker, where this is unrelated to productivity
    • The worker's measurable output per hour

15. Under marginal productivity theory in a competitive market, paying identical workers different wages would be expected to:

    • Increase the wage gap, as the lower-paid group becomes more productive over time and so the pay gap grows
    • Have no effect on hiring decisions in any case, since employers pay little attention to the wages of the groups they hire in the market
    • Shift hiring towards the lower-paid group and gradually reduce the wage gap, unless market power or preferences sustain it
    • Raise the lower-paid group's wage above the other group's immediately, because firms rush to hire workers who are cheaper to employ

16. Which evaluation best addresses the impact of wage discrimination on the economy as a whole?

    • It always increases total output because it reduces wage costs
    • It reduces efficiency and can lower total output and tax revenue, though its scale varies across sectors and countries
    • It has no effect on tax revenue since wages are unrelated to incomes
    • It only harms employers, not the wider economy

17. Occupational segregation refers to:

    • Government-set pay scales for each occupation
    • The concentration of particular groups of workers in particular occupations
    • The movement of workers between regions
    • An equal distribution of workers across all occupations

18. Which real-world evidence would support the existence of wage discrimination?

    • Reports that employers never hire from minority groups
    • Data showing all workers in an occupation earn identical pay
    • Statistics showing productivity is unrelated to pay in every case
    • Studies showing equally qualified applicants receive different pay offers based on gender or ethnicity

19. Why might wage discrimination persist in a market with imperfect information?

    • Imperfect information always eliminates wage discrimination, because once employers know the true productivity of their workers
    • Employers and workers may not know true productivity, so prejudice or stereotypes can shape pay decisions
    • Discrimination persists only under perfect competition
    • Information is perfect in all labour markets with discrimination

20. A firm's employment policy reduces the number of women in senior roles. What is the most likely economic consequence?

    • A permanent fall in senior pay for all staff
    • A larger talent pool that raises productivity
    • No consequence, since senior roles are unaffected by gender, so the firm's performance is the same whatever its promotion policy
    • A smaller pool of talent in senior roles, which may reduce productivity and firm performance

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