In the land of Chin there are two distinct and equally numerous peoples: Yins an

Question

In the land of Chin there are two distinct and equally numerous peoples: Yins and Yans. The Yang have historically been stronger and more aggressive that the Yins. Both the Yins and Yans play paddle tennis, but paddle tennis tournaments have always been segregated by group because of the physical advantages of the Yans. The Yin do not object to paddle tennis tournaments being segregated, but recently have been upset about the fact that the top Yin players receive less than the top Yan players. You have been hired by the Chin Paddle Tennis Association (CPTA) to access the market for paddle tennis players. CPTA have asked you a few questions given below.

a. What is the most likely source of the wage differential between the Yin and Yan paddle tennis players? Briefly explain.

b. Is this discrimination as economists define the term?

c. Is the wage differential likely to persist over time, or do conditions in Chin have to change in order for the differential to disappear?

Explanation / Answer

a) Yans have an innate physical advantage which increases the marginal worth of each player, and this is the source of the wage-differential.

b) This is not discrimination according to economics because the players are paid based on their varying levels of competence and marginal worth.

c) The wage differential is likely to persist as at the source of the difference is the innate comparative advantage of a clan. Only if the choice and range of games are expanded can we appreciate other aspects which go beyond physical strength.

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