Employment Discrimination

Abstract

This article first parses the multiple overlapping definitions of discrimination, including distinctions between group and individual discrimination and between segregation and discrimination in pay. The article then summarizes the major economic models of discrimination, particularly Becker's taste-for-discrimination model and statistical-discrimination models, as well as sorting and status-production models. The discussion focuses on the conditions under which markets will tend to eliminate discrimination, noting that this occurs in a more limited range of situations than commonly recognized. The article next surveys the economic role of antidiscrimination laws, evaluating arguments that the law speeds the journey to a non-discriminatory equilibrium and that the law breaks social norms perpetuating inefficient discrimination. Finally, the article examines empirical studies of employment discrimination laws, including analyses of litigation trends and of the laws' effects on labor markets.

Law-and-Economics Approaches to Labour and Employment Law

“…16 Among the many examples here are scholars suggesting that the anti-discrimination laws, even while interfering with employer freedoms, could enhance overall efficiency. 17 More recently, employment law-and-economics scholars have turned to erathree empirical testing of hypotheses. Theory demonstrates how markets might work or fail, or demonstrates how laws might bolster market efficiency or are needed to correct market failure.…”