by Jim Rose in discrimination, gender, human capital, labour economics, politics - New Zealand, unions Tags: employer discrimination, gender wage gap, gender wage gap discrimination, government discrimination, New Zealand Greens, sex discrimination

The unions representing public servants and the Green Party are very excited about the gender wage gap this week. So much so that the public service union presented the Treasury with an invoice for that wage gap in the public sector of 14.1%.

Women in the public service are paid 14.1% less than men. We've invoiced @honbillenglish for the missing $294,827,136 http://t.co/QW5z4tU7bv—

(@NZPSA) May 11, 2015

Oddly enough, despite their concerns with the gender wage gap in the public service, the public service unions are stridently against both privatisation and contracting out.

It is almost trite to note is that one of the earliest analytical results in the labour economics of discrimination was that profit maximising employers are much less likely to discriminate than firms that are not subject to a profit and loss constraint and the discipline of bankruptcy.

A prejudiced employer pays a wage above the competitive wage to attract the particular recruits he or she is prejudiced in favour of and does not hire enough workers because he must pay higher wages. This results in lower output and profits than without discrimination.

@greencatherine Unadjusted NZ gender pay gap is 6%, the best in world. http://t.co/2fYuVbJg9E—

Jim Rose (@JimRose69872629) March 19, 2015

Bureaucrats can indulge their prejudices without putting the survival of their business in jeopardy. Entrepreneurs who don’t hire on merit risk running out of going out of business because their costs are hire and their businesses less productive.

…market mechanisms impose inescapable penalties on profits whenever for-profit enterprises discriminate against individuals on any basis other than productivity. Though bigoted managers may hold sway for a time, in the long run the profit penalty makes profit-seeking enterprises tenacious champions of fair treatment.

Early examples of the greater propensity for discrimination in the public sector and non-profit organisations are by Armen Alchian and Ruben Kessel in Competition, Monopoly, and the Pursuit of Money in 1962 and Gary Becker’s pioneering The Economics of Discrimination in 1957.