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Labor Market Discrimination, Pay Inequality, and Effort Variability: An Alternative to the Neoclassical Model

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Author Info

  • Morris Altman

    (University of Saskatchewan)

Abstract

In model presented in this paper, once one allows for effort variability that is positively related to labor compensation, relatively low wages that are a product of labor market discrimination can persist over time even in a world of perfect product market competition. Low wage labor is no longer cheap labor and market forces cannot eliminate pay inequality due to labor market discrimination. This stands in sharp contrast to standard economic theory which suggests that labor market discrimination cannot explain the persistence of pay differentials between identifiable groups of individuals since such pay inequality would be eliminated by competitive market forces.

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File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume21/V21N2P157_169.pdf
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Bibliographic Info

Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

Volume (Year): 21 (1995)
Issue (Month): 2 (Spring)
Pages: 157-169

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Handle: RePEc:eej:eeconj:v:21:y:1995:i:2:p:157-169

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Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
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Web page: http://www.ramapo.edu/eea/journal.html
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Related research

Keywords: Discrimination; Inequality; Low Wage; Pay; Wage;

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Cited by:
  1. PeĢrotin, V & Robinson, A & Loundes, J, 2003. "Equal opportunities practices and enterprise performance," ILO Working Papers, International Labour Organization 363153, International Labour Organization.

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