Economics Question

ECON 328 In Class Exam – Section on Economics of Discrimination Problems
Turn on your computer camera while on Zoom. After completing the exam, take a clean photo or scan and
email to me at [email protected]. You have 50 minutes to complete the problems.
1. (15 points) Assume a professional sports league has two teams (for simplicity). Team A has some
prejudice against minority players, while Team B does not. Team A has a discrimination coefficient
that increases as it employs more minority players, written as: dM = 0.01EM where EM is the number
of minority players the team hires. The teams face competitive wages of wW = $150 for non-minority
players and wM = $100 for minority players. Lastly, assume each team must employ 200 players.
Minority and non-minority players are equally productive.
(a) How many minority players and non-minority players will Team A employ? How many minority
players and non-minority players Team B hire? Explain.
(b) Both teams generate identical amount of revenue and the only operating costs are labor (player)
costs. Compare (calculate) the profits of Team A and Team B.
(c) Do you expect that the hiring situation described in part a) to be sustainable in the long run? If so,
explain why. If not, explain why not.
2. (25 points) A college coaches advocacy group speculates that there exits gender discrimination in
the hiring of coaches in women’s college basketball, based on the following information: Every
Division I college men’s basketball program has a male head coach (no women coaches);
alternatively, males makeup 40 percent of the coaches at women’s college basketball teams with
60 percent filled by female coaches. In addition, data indicate that women coaches are on average
paid about 5 percent less than male coaches.
(a) Explain how these observed differences may support the hypothesis of employer discrimination
against women (i.e., schools discriminate against women coaches).
(b) Explain how the findings may support another form of discrimination, or not necessarily indicate
there exists discrimination at all.
(c) Now you want to rigorously test whether there exists wage (and/or hiring) gender discrimination
among coaches in women’s college basketball. Describe clearly how you would approach the
problem and the information you need to do so. For instance, write out an equation to statistically
estimate with relevant variables to include in the model. Describe the data that you need (or
would like) to collect for the study. How would you measure coaching performance/productivity?
How would you measure gender? Discuss the advantages and disadvantages of your measures.
(d) Suppose that you find, statistically speaking, evidence that women coaches are paid less than their
male counterparts, all other factors constant. According to the Becker model of discrimination,
would you expect this discrimination to persist in this college coaching labor market? Explain.

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