Wage discrimination as an illegal behavior

Paying different wages to workers of equal productivity because of demographic groups to which they belong is illegal in the US and other Western countries. Yet, the vast economic literature on wage discrimination has entirely overlooked this fact when modeling the employer's discriminatory behavior. Consequently, the desirability of practicing wage discrimination, whether arising from differences in labor supply elasticities or from an inherent taste for discrimination, has never been confronted with the risk of getting caught and punished due to violating the equal pay law. Incorporating this risk into Joan Robinson''s (1969) discriminatory monopsony model and Gary Becker''s (1971) taste-for-discrimination model, this paper examines the effects that illegalizing wage discrimination may have on the wage differential under discriminatory monopsonistic and competitive conditions. The analysis unveils a sharp contrast in the effect of illegalization in the alternative settings.Illegal Behavior

Another Look at Persistent Inequality in Israeli Education

This is a study of change in inequality of educational opportunity in Israel. Recent studies in Israel and elsewhere have found declining inequality of opportunity at the primary and secondary levels of education coupled with more persistent inequality at higher levels. However, these studies ignore the fact that the relative value of qualifications change as education expands over time. Many scholars agree that that the value of qualifications lies in their relative position in the distribution of education. And yet, in empirical research education is typically represented in absolute rather than relative terms. I analyze all available Israeli mobility data for the cohorts born between1951-1981 and estimate models of both absolute and relative education, as well as of education recoded into its earning value. When education is defined in absolute terms, I find the familiar decline in the effects of parents’ education. When it is measured in terms of its earning value or in relative terms, the results show significant increases in the effect of parents’ education on education. I also study change in the effects of ethnicity and of gender.