Remedying "Unfair Acts": U.S. Pay Equity by Race and Gender

Case studies in Canada, Australia, and the U.S. have found that pay equity (or comparable worth) has reduced the gender-based wage gap substantially, and results of research on the gender composition of jobs have been used guiding pay equity implementation. But, in general, the racial composition jobs remains overlooked in the literature and in public policy. We extend previous work on eliminating the wage penalty of employment in female-dominated occupations to estimating the potential effect of adopting comparable worth to alleviate race- as well as gender-based wage discrimination. First we report the negative impact of racial-ethnic and female composition of jobs on pay in the U.S. Correcting for this form of wage discrimination, we find that implementing comparable worth would appreciably narrow the race- and gender-based wage gaps and significantly reduce the percent of workers earning poverty-level wages, especially among women of color. Close to 50 percent of women of color and 40 percent of white women currently earning less than the federal poverty threshold for a family of three would be lifted out of poverty. Second, we show that, in addition to the effects of occupational concentration, being a woman, an African-American, or a worker of Hispanic origin negatively and significantly affects pay. Not every type of wage discrimination is alleviated by a pay equity policy, which is why activists have also supported anti-discrimination and affirmative action policies for women and people of color.     

COMPARABLE WORTH: CANADA'S EXPERIENCE

This paper discusses the design, implementation and administration of comparable worth legislation in Canada, focusing particular attention on the potential of comparable worth to close the male-female earnings gap. The authors document the Canadian legislative initiatives, provide illustrative evidence on the impact of comparable worth, and identify the main policy lessons to be learned from the experience of Canada, where the comparable worth concept has evolved furthest.     

Comparable worth in a decentralized labour market: the case of Ontario

Abstract.  We document the application of pro‐active pay equity legislation to the private sector of the Canadian province of Ontario in the early 1990s. We report substantial lapses in compliance among smaller firms where the majority of men and women work. We also find that the pay equity law had no effect on aggregate wages in female jobs or on the gender wage gap. This experience provides unique perspectives on (1) the tensions between the workings of a decentralized labour market and the principles of comparable worth and (2) the obstacles to its extension to the private sector. JEL classification: J7, J3     

A gender analysis of U.S. labor market policies for the working poor

Current anti-poverty policy proposals focus on welfare reform to the exclusion of reforming the low-wage labor market. In contrast, we compare two policy proposals aimed at low-wage labor markets: a national comparable worth policy and an increase in the minimum wage. With both policies we pay specific attention to their impact by gender. Our findings suggest that while both would reduce poverty among working women, the impact of a comparable worth policy on female poverty would be greater under most scenarios presented. It is estimated that an increase of 96 cents per hour in the national minimum wage would be necessary to equal the poverty reduction effect for women workers of a comparable worth policy which excludes small employers. Both policies decrease the incidence of povertylevel wages less among men, since roughly 60 percent of minimum wage workers are women. Additionally, not only would a national comparable worth policy improve the economic status of low-waged women workers, it would also narrow the gap between male and female poverty. While an increase in the minimum wage would also reduce this gap, comparable worth would virtually eliminate it.     

公共政策的经济学分析

任何一项公共政策的制定和实施都需要付出一定的代价,关键在于这种代价能不能承受,值不值得承受。经济学与公共政策有着密切的联系,即使是一些看起来与经济问题无关的公共政策,如果细心分析总是可以发现其中的经济学逻辑。这一逻辑告诉我们,公共政策是通过比较其成本和收益而产生的,公共政策存在的理由在于它的社会成本小于以市场和企业自行解决的方式来解决问题。     

NEGLECTED WOMEN AND OTHER IMPLICATIONS OF COMPARABLE WORTH

Comparable worth proposals presume that the gender wage gap is a result of occupational segregation. The proposals argue that females are channeled into "women's jobs" and that overcrowding depresses women's wages below the "value" of the work performed. Comparable worth legislation proposes replacing the idea of equal pay for equal work with a principle of equal pay for different work of comparable worth determined by job evaluations. Such job evaluations are feasible only for the public sector and large private employers. The analysis in this paper recognizes that comparable worth wage adjustments are to be limited to the large employers. It examines how employers in the covered sector tend to alter their pay packages and hiring standards. Comparable worth legislation also affects wages in the uncovered sector populated by small employers. The rationing of women's jobs and the changes in hiring standards for men's jobs in the covered sector tend to redound to the benefit of smart, energetic women and dull, indolent men.     

Public policy towards cross subsidy

Although elusive of measurement, cross subsidies are widely believed to have existed on a significant scale in network industries, particularly when these developed under public ownership. After providing careful definitions of when cross subsidy occurs, this article distinguishes eight distinct cases, drawing examples primarily from network sectors. Debates about the desirability of cross subsidy in the context of public enterprise are then reviewed; issues such as the geographical averaging of tariffs and the extent to which non-commercial obligations should be reimbursed by government on the recoup principle are addressed. The policy package of denationalization, liberalization and new forms of regulation have far-reaching implications for cross subsidy policy. For example, liberalization reduces the ability of incumbent enterprises to cross subsidize uneconomic links in a network, particularly if entrants are not subjected to comparable social obligations. Moreover, denationalized enterprises will more vigorously pursue financial profitability, discontinuing cross subsidy related to the traditional equity and political goals, but exploiting cross subsidy as an entry-repelling tool. Both at the member state and European Union levels, there is evidence of confused thinking about the desirability and continued feasibility of cross subsidy; for example, not recognizing the inconsistency involved in imposing non-economic obligations on incumbents while removing barriers to competitive entry. These developments not only erode the viability of the missions of public enterprises in their traditional sectors but also raise issues for public policy if and when technological developments make possible new forms of price discrimination in social sectors.     

Are policy platforms capitalized into equity prices? Evidence from the Bush/Gore 2000 Presidential Election

This paper tests for the capitalization of policy platforms into equity prices using a sample of 70 firms favored under Bush or Gore platforms during the 2000 U.S. Presidential Election. Two sources of daily data during the six months leading up to the election are incorporated: firm-specific equity returns and the probability of a Bush victory as implied by prices from the Iowa Electronic Market. For this group of politically sensitive firms, the daily baseline estimates demonstrate that platforms are capitalized into equity prices: under a Bush administration, relative to a counterfactual Gore administration, Bush-favored firms are worth 3% more and Gore-favored firms are worth 6% less, implying a statistically significant differential return of 9%. Estimates based on weekly returns are even stronger, suggesting a differential return of 16%. The most sensitive sectors include tobacco, worth 13% more under a favorable Bush administration, Microsoft competitors, worth 15% less under an unfavorable Bush administration, and alternative energy companies, worth 16% less under an unfavorable Bush administration.A corresponding analysis of campaign contributions, which allows for heterogeneity in the importance of policy platforms to the firms, supports the baseline estimates.     

Are policy platforms capitalized into equity prices? Evidence from the Bush/Gore 2000 Presidential Election

This paper tests for the capitalization of policy platforms into equity prices using a sample of 70 firms favored under Bush or Gore platforms during the 2000 U.S. Presidential Election. Two sources of daily data during the six months leading up to the election are incorporated: firm-specific equity returns and the probability of a Bush victory as implied by prices from the Iowa Electronic Market. For this group of politically sensitive firms, the daily baseline estimates demonstrate that platforms are capitalized into equity prices: under a Bush administration, relative to a counterfactual Gore administration, Bush-favored firms are worth 3% more and Gore-favored firms are worth 6% less, implying a statistically significant differential return of 9%. Estimates based on weekly returns are even stronger, suggesting a differential return of 16%. The most sensitive sectors include tobacco, worth 13% more under a favorable Bush administration, Microsoft competitors, worth 15% less under an unfavorable Bush administration, and alternative energy companies, worth 16% less under an unfavorable Bush administration.A corresponding analysis of campaign contributions, which allows for heterogeneity in the importance of policy platforms to the firms, supports the baseline estimates.     

Towards governance of human tissue engineered technologies in Europe: Framing the case for a new regulatory regime

The development of human tissue engineered technologies, located in the context of wider debates around the governance of biotechnology, raises important issues. This paper explores these issues by examining theoretical approaches to the regulation of risk, the limits of technical risk assessment and implications of scientific uncertainty in this area. We consider broader social concerns and how these shape contemporary debates relating to the sourcing and use of human tissue-engineered technologies. We examine the emergence of a new regulatory ‘regime’ in Europe and the social shaping of a regulatory space between medicinal products, medical devices and biologics where these innovative products may be situated. Reporting on recent policy initiatives and a survey of regulatory authorities in Europe, we analyse the ways in which public trust in these technologies may be engendered, providing insight into public participation in policy debate and relations between industry and the regulatory state at national and European levels.     

The political economy of direct legislation: direct democracy and local decision–making

Local and regional governments account for an important share of total government spending and, given the decentralization trend in OECD nations, this is likely to increase. How should this spending be governed? This article argues that direct democracy is best suited to organize decision–making at the state and local level. To support this, we present the main theoretical arguments on why and how referenda and initiatives affect fiscal policy outcomes. The basic argument concerns voter control. Under representative democracy, citizens only have direct control at election time. With referenda and initiatives, citizens can selectively control their representatives on specific policies whenever they deviate sufficiently from citizens' preferences. As a result, fiscal policy outcomes are likely to more closely reflect voter preferences. We empirically test this on Swiss data since Switzerland provides a 'natural laboratory' for local governance. The governance structures of Swiss cantons and localities with respect to fiscal issues range from classic parliamentary democracy to pure direct democracy, and an important part of spending and taxation is controlled at these levels. Specifically, we estimate an econometric model of fiscal behaviour using data from 1986 to 1997 for the 26 Swiss cantons, and 1990 data on 134 local communities. It is shown that mandatory referenda on fiscal issues at both levels have a dampening effect on expenditure and revenue, and at the local level also on public debt. Combining this with existing empirical evidence leads to a relatively uncontested result, namely that elements of direct democracy are associated with sounder public finances, better economic performance and higher satisfaction of citizens.     

Educational expansion,government policy and wage compression

The main objective is to measure the elasticity in the response of relative wages by education to relative supplies of educated labour. Using rigorously comparable urban wage-labour market surveys, an econometric comparison is made of Kenya and Tanzania — countries which constitute a natural experiment, having different secondary education policies but being similar in other relevant respects. Post-primary educational expansion, as Kenya, is an effective means of compressing wages. However, the Tanzanian scarcity premium on post-primary education is held down by the alternative means of public sector pay policy. The analysis suggests an important role for occupation in the wage adjustment process.     

Applying behavioural economics to public policy in Canada

Behavioural economics incorporates ideas from psychology, sociology and neuroscience to better predict how individuals make long‐term decisions. Often the ideas adopted include present or inattention bias, both potentially leading to suboptimal outcomes. But these models also point to opportunities for effective, low‐cost government policies that can have meaningful positive effects on people's long‐term well‐being. The last decade has been marked by a growing interest from governments the world over in using behavioural economics to inform policy decisions. This is true of Canada as well. In this paper we discuss the increasingly important role behavioural economics plays in Canadian public policy. We first contextualize government policies that have incorporated insights from behavioural economics by outlining a collection of models of intertemporal choice. We then present examples of public policy initiatives that are based upon findings in the field, placing particular emphasis on Canadian initiatives. We also document future opportunities, challenges and limitations.     

COMPARABLE WORTH: SOME ISSUES FOR CONSIDERATION

The comparable worth approach is a radical departure from market determination of wages. This paper considers some economic issues pertinent to the comparable worth dialogue and focuses on implications of comparable worth legislation at the state and local levels. We show that current sex differentials in wages could reflect voluntary labor supply choices and/or discrimination. We also discuss the reverberations of comparable worth and note that some women in an occupation targeted with a wage increase could be made worse off as a result of employer cutbacks. We discuss why state or local officials may be hesitant to adopt comparable worth and also offer possible explanations for their being receptive to it. The intent throughout is to provide a balanced discussion that will aid individuals in taking an educated stand on the issue.     

Multiple-objective methods in regulatory decision making: A conceptual framework applied to U.S. automobile safety standards

Public policy making is a complex matter. Policy makers are charged with balancing a broad spectrum of competing objectives, reflecting in varying degrees the interests and aspirations of a diverse range of constituencies and stakeholders. Policy decisions have differential impacts on differing constituencies and the contributions of these impacts to objectives are frequently uncertain, difficult to quantify, and hotly disputed. Formal methods of decision analysis have been advanced as aids for coping with complexity and have been applied to some public policy issues, most notably the management of water resources. While formal methods have the apparent benefit of rationalizing the policy process and improving the efficacy and equity of policy decisions, serious questions remain concerning the acceptability and ultimate usefulness of formal analyses in the public arena. In this article we examine these questions in the context of policy making relating to government regulation of automobile designs for safety. We consider what would be involved in attempting to use a relatively modern, multiple-objective approach in this context. The key questions are how and, more importantly, why multiple-objective methods might be used. The article begins with an illustrative case study, describes the current policymaking process, identifies the parties involved in and affected by this process, elicits key objectives, looks briefly at some scalar-objective approaches, and then outlines a multiple-objective approach. The framework developed arguably is useful in assisting policy making, at least at a qualitative level. Issues which impede a more quantitative resolution of this framework are discussed. This article is intended as a pilot study which may promote research toward the achievement of a useable multiple-objective procedure applicable in the public domain.     

The Use and Cost of Child Care in Australia

The use and cost of child care have become important policy issues with rising labour force participation for women responsible for young children. In this article it is shown that for children aged less than 2 informal care is much more important than formal care. For children aged 3 to 5 by far the most important, and cheapest, form of formal care is preschool. The category of formal care which has expanded most rapidly is child care centre places. However the recent expansion of female employment has been effected with no rise in the share of formal care in the total. Publicly supplied child care centre places are over 40 per cent more expensive to produce than private ones. It is argued that for those who do not receive a fee relief subsidy public care is more expensive than private care. The inference is drawn that people are willing to pay more for public than private care because public care is of higher quality. However those buying this higher quality care pay (at most) only 80 per cent of the cost of producing the care. The shortage of care in the public sector is not solved by private sector expansion because users of care are not willing to pay the price of producing high quality care.     

Heterogeneous Preferences for Community Recycling Programs

This paper examines household preferences for community recycling programs, which have both public and private good dimensions. The data come from a survey conducted in Seattle (WA) which elicited stated preference-contingent ratings for different recycling programs relative to status quo, with experimental variation in the overall community recycling rate achieved and expected household cost. The recycling rate is interpreted as capturing the public benefits of recycling programs and constitutes the most common measure used by policy agencies for setting waste management objectives and evaluating policy initiatives. The analysis begins with fixed parameter models that explore different ways of handling rating data and mixed logit estimations that capture household preference heterogeneity both within and across different recycling programs. This analysis yields unique estimates of willingness to pay for an increase in the community recycling rate. Predicted individual-specific utility parameters are then regressed on household background information to explicitly examine the nature of preference heterogeneity. Overall, this paper generates interpretable policy-relevant insights into the public and private good dimensions of community recycling programs.     

“COERCIVE COOPERATION”? ONTARIO'S PAY EQUITY ACT OF 1988 AND THE GENDER PAY GAP

Evaluating the effect of pay‐equity laws is important and yet difficult as one needs to deduce what would have occurred without the policy intervention. We use a new tool, synthetic‐control method, to examine the effects of Ontario's Pay Equity Act on the gender pay gap. This tool enables us to create a “Synthetic” Ontario, which resembles Ontario more closely than does any other single province. Using Synthetic Ontario to compare what actually happened in Ontario to what would have happened, we find that the act has had little or no effect on the female‐male wage gap in Ontario. (JEL J7, J3)     

Product standards, innovation and regulation

This paper examines the public policy, issues associated with product standardization. It addresses three main questions: (1) Do laissez faire markets provide an appropriate level ofcompatibility and standardization? (2) Does standardization result in anti-competitive behaviour? (3) Does standardization promote or retard innovation? The theoretical debate surrounding each of these issues is briefly reviewed. The process of setting standards with respects to high definition telivision technology is examined and used to illustrate the problems facing regulators. The paper concludes that, in the case of high definition television, the US market-based approach to standard setting has been more successful than has the more directly interventionist approaches adopted in Europe and Japan.     

LIFETIME AND VERTICAL INTERTEMPORAL INEQUALITY, INCOME SMOOTHING, AND REDISTRIBUTION: A SOCIAL WELFARE APPROACH

Between and within-households intertemporal inequality indices are proposed to highlight the vertical and lifetime (i.e. cyclical) components of overall intertemporal inequality. Comparison with the classical static inequality indices is made. Income redistribution and smoothing (i.e. stabilization) are conveniently defined as the public policy impact on welfare, by means of the relative increase in intertemporal vertical and cyclical equity, respectively. The issue is important as many public policies are aimed at both (vertical and cyclical equity) objectives. Our approach provides a more appropriate evaluation of the desirability of public reforms aimed at achieving a greater vertical and cyclical equity, within a social welfare framework.