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Intermediate Microeconomics

6. Labor Market Discrimination

The characteristics of jobs and workers often result in differences in pay. But it is possible for earnings differences to arise between equally skilled workers in competitive labor markets. In the Pencasts for this topic, we demonstrate how particular demographic characteristics, such as race, ethnicity, gender or sexual orientation, can generate wage dispersion. Differences based on such demographic characteristics are often attributed to discriminaiton. In economics, there are two primary theories of discrimination, one that is based on prejudice and another that is based on imperfect information. We examine both of these frameworks in the Pencasts for this topic.

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Discrimination Coefficient

This Pencast discusses the discrimination coefficient introduced by Gary Becker in his 1957 book. [Play Pencast]

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Employer Discrimination

This Pencast illustrates graphically how the black-white wage ratio is determinined in the market with discriminatory firms. We demonstrate how to find wages and employment levels when the nature of production generates a segregated workforce. [Play Pencast]

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Black-White Wage Differentials

This Pencast shows how (a) an increase in the supply of black workers, (b) an increase in demand for black workers, and (c) a decline in discriminatory preferences affects the black-white wage gap. [Play Pencast]

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Employee Discrimination

This Pencast covers discrimination against particular groups on the part of employees (or co-workers). [Play Pencast]

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Customer Discrimination

This Pencast covers discrimination against particular groups on the part of the firm's customers. [Play Pencast]

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Statistical Discrimination

This Pencast describes the idea behind statistical discrimination, which is the result of an information problem. It is demonstrated how different wages result between two demographic groups that has nothing to do with animus. [Play Pencast]

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Measuring Discrimination

This Pencast shows how to measure discrimination via the Oaxaca Decomposition. [Play Pencast]

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