Approaches to the Economics of Discrimination

Abstract The object of this chapter is to see how much “conventional” economic theory can say about the problem of discrimination. As in other areas, economists have more to say about questions of economic efficiency than about issues of equity; but because economists have less to say about the latter—or about the social and political implications of discrimination—does not mean that these are any the less important. This chapter explores how economic systems may give rise to wage discrimination, with workers in two groups that are innately the same receiving persistently different wages. It explains the deficiency in the approach based on discriminatory preferences (e.g., Becker), and explores theories…