Assume that women live longer than men on average. Suppose an employer hires men
ID: 1108072 • Letter: A
Question
Assume that women live longer than men on average. Suppose an employer hires men and women, pays them the same wage for the same job, and contributes an equal amount per person toward a pension. However, the promised monthly pension after retirement is smaller for women than for men because the pension funds for them have to last longer on average. According to the Supreme Court, the above employer would be guilty of discrimination because of the unequal monthly pension benefits after retirement. Analyze the economic effects of the Supreme Court ruling outlawing these pension differences.
Explanation / Answer
By outlawing pension differences, the employers will have to provide equal pensions amounts to both men and women. Knowing the fact that women live longer than men, employers will shy away from employing women, as they will lead to higher pension amounts.
As a result, demand for female employees will fall while that of male employees will increase.