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Local labor markets and taste-based discrimination

Authors :
Clémence Berson
Source :
IZA Journal of Labor Economics, Vol 5, Iss 1, Pp 1-21 (2016)
Publication Year :
2016
Publisher :
Walter de Gruyter GmbH, 2016.

Abstract

This article appeals to heterogeneity in workers’ non-wage preferences to model taste-based discrimination. Firms hire both types of workers and pay lower wages to minority workers, whatever their taste for discrimination. A single prejudiced firm in the market produces a substantial wage gap in all firms. Consequently, discrimination allows unprejudiced firms to make non-zero profits, so that they have little incentive to drive out prejudiced firms. As the market does not eliminate discrimination, state intervention is required. Indirect policies do not affect the absolute wage gap between the two groups, but may be more likely to be used than direct policies.

Details

ISSN :
21938997
Volume :
5
Database :
OpenAIRE
Journal :
IZA Journal of Labor Economics
Accession number :
edsair.doi.dedup.....300bd93db25fe8a7f742240e4e1a36cf
Full Text :
https://doi.org/10.1186/s40172-016-0045-9