labor-spring2015-assignment6
Assume education is the only determinant of productivity. With zero years of education, black and white workers both earn a wage of $2.00 per hour. Each additional year of education causes the wage of whites to rise $0.50 per hour and that of blacks by $0.20. The average black worker has 10 years of education and the average white worker has 12 years. According to the residual method, the percent of the wage gap due to discrimination is:
(a) 25 percent.
(b) 50 percent.
(c) 75 percent.
(d) none of the above.