Thursday, November 2, 2017
William E. Even & David A. MacPherson, The Gender Wage Gap and the Fair Calculations Act
If enacted as a law, the Fair Calculations Act would require forensic economists to ignore an injured party’s gender when forecasting the loss in future earnings. We discuss how this would affect the size of awards for men and women, and some of the issues that would arise if the law is enacted. Of particular interest is the extent to which gender-differences in earnings, earnings growth, and work-life expectancy are the result of sex-discrimination in labor markets as opposed to sex-differences in preferences. We present evidence that gender differences in human capital characteristics explain a large share of gender differences in in labor market outcomes, there is considerable disagreement about how to interpret the results. We also show that gender differences are diminishing over time, but it is not likely that the gap will disappear in the near future. Finally, we discuss how forensic economists may have to rely on additional information when forecasting earnings if they are no longer allowed to use gender.
Here's the proposed federal Fair Calculations in Civil Damages Act which "prohibits courts from awarding damages to plaintiffs in civil actions using a calculation for projected future earning potential that takes into account a plaintiff's race, ethnicity, gender, religion, or actual or perceived sexual orientation."