Assume that women live longer than men, on the 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. According to a decision by the Supreme Court, the above employer would be guilty of discrimination because of the unequal monthly pension benefits after retirement.
a. Comment on the Court’s implicit definition of discrimination. Is it consistent with the definition normally used by economists? Why or why not?
b. Analyze the economic effects of this decision on men and women.