Labor Market Discrimination, Pay Inequality, and Effort Variability: An Alternative to the Neoclassical Model
AbstractIn 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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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 21 (1995)
Issue (Month): 2 (Spring)
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Discrimination; Inequality; Low Wage; Pay; Wage;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
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- Pérotin, V & Robinson, A & Loundes, J, 2003. "Equal opportunities practices and enterprise performance," ILO Working Papers 363153, International Labour Organization.
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