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A small firm in Mindonia is being sued for discrimination. The average wage for the female employees in this firm is $30,000 while the average wage for male employees is $48,000. You get the payroll records and discover that of the three female workers one has 6 years of experience, one has 10 years of experience, and one has 14 years of experience. There are four male workers in the firm and they have 8,10,12 and 18 years of experience.
a) How much of the gender difference in earnings (in total dollars) is explained by differences in experience? Show your work.
b) How much of the gender difference in earnings remains unexplained (Please use the formula)?
c) In order to conclude that the firm is indeed discriminating against women, what else needs to be true?
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