Discrimination

1
Discrimination

• Discrimination vs. Prejudice
• An Action vs. Feeling
• Discrimination - unequal treatment of equals
• Two issues with respect to discrimination
• 1. Equal access to work
• 2. Equal pay for equal work

2
Social Psychology The Three Part Process of
Discrimination

• Prejudice or the affective component
• This is a form of group identification, based on
  an attitude not supported by facts. The attitude
  is a product of an irrational feeling of
  negativity toward another group.
• Cognitive component
• The assignment of a single set of
  characteristics to all members of a group.
• Behavioral component
• This is the discrimination.
• Economists tend to focus on outcomes rather than
  origins.

3
The Taste for Discrimination

• All else being equal, tastes dictate a
  significant amount of behavior.
• However, people can be given incentives to change
  behavior.
• We can look at wages and profits and measure the
  consequences of discrimination.

4
Employer Discrimination

• Employer discrimination against black workers
• MRP and Wages to Each group
• MRP White Wages
• MRP - d Black Wages
• Where d the impact of discrimination
• MRP Black Wages d
• Hence, if we assume MRP of each worker is equal
• White Wages Black Wages d
• or Black Wages White Wages - d
• where d gt 0 and is a function of employer
  distaste for black workers.

5
Utility Maximization vs. Incomplete Information

• The wages paid to black workers are less than the
  wages paid to white workers when discrimination
  exists.
• Remember, employer discrimination is based upon
  utility maximization rather than profit
  maximization.
• Statistical discrimination - the use of group
  averages to judge individual productivity.
• This is discrimination based upon incomplete
  information rather than utility maximization.

6
Employer Discrimination Consequences

• What are the costs and benefits from employer
  discrimination?
• Employers and the discriminated group are worse
  off.
• Non-discriminated workers and employers of the
  discriminated workers are better off.
• With respect to baseball...
• White players in Major League Baseball benefited.
• Owners of Negro League teams also benefited.
• Competition should eliminate discrimination.
  REVIEW MLB EVIDENCE
• Important note when markets are not competitive
  than discrimination will not be eliminated over
  time

7
Employee Discrimination

• Employees with a taste for discrimination
  regards their wage as
• w(1-d) where d is the coefficient of
  discrimination
•  Impact of employee discrimination
• If the market is perfectly competitive employee
  would require a higher wage as compensation for
  working in an integrated environment. In a
  competitive market no such offer would be made,
  hence this person would not accept any offer.
• Outcome A segregated workforce
• If the market is not competitive the better
  players could receive a wage that does compensate
  them for the integrated workforce

8
Customer Discrimination

• If this exists the customer perceives the
  following
• Pb (1c) Pw
• where cgt0 and is a function of the customers
  distaste for products made by blacks.
• The evidence of consumer discrimination?
• Baseball card re-sale values
• How does consumer discrimination impact
  attendance?
• Supporting teams that are less black or more
  white
• Reduce the intensity of support for integrated
  teams
• Stop following the sport entirely

9
Positional or Hiring Discrimination

• Role discrimination - the systematic steering of
  minorities to specific positions on the field and
  within the coaching ranks.
• This may be a form of statistical discrimination.