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Hierarchy of Ideals in Market Interactions: An Application to the Labor Market

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  • Aurelie Charles

Abstract

This paper argues that a hierarchy of ideals exists in market interactions that sets the benchmark on the norm of fairness associated with these interactions, thus affecting pricing decisions associated with market exchange. As norms emerge, an ideal determines the criteria of optimal behavior and serves as a basis for market exchange. Norms homogenize the diversity of commodities in market interactions according to a hierarchy of norms and values. The paper then goes on to illustrate how this hierarchy of ideals works in the labor market, leading to inequality of access to jobs and wages between groups of individuals. Groups socially perceived to be diverging from the context-dependent dominant ideal are likely to suffer most in market interactions.

Suggested Citation

  • Aurelie Charles, 2013. "Hierarchy of Ideals in Market Interactions: An Application to the Labor Market," Economics Working Paper Archive wp_779, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_779
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    References listed on IDEAS

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    1. William Darity, 2005. "Stratification economics: The role of intergroup inequality," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(2), pages 144-153, June.
    2. Aurélie Charles, 2012. "Exchange Entitlement Mapping," Perspectives from Social Economics, in: Exchange Entitlement Mapping, chapter 0, pages 53-75, Palgrave Macmillan.
    3. Lorenz Goette & David Huffman & Stephan Meier, 2006. "The Impact of Group Membership on Cooperation and Norm Enforcement: Evidence Using Random Assignment to Real Social Groups," American Economic Review, American Economic Association, vol. 96(2), pages 212-216, May.
    4. Fehr, Ernst & Kirchler, Erich & Weichbold, Andreas & Gächter, Simon, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-351, April.
    5. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
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    Cited by:

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    2. Goel, Deepti & Deshpande, Ashwini, 2016. "Identity, Perceptions and Institutions: Caste Differences in Earnings from Self-Employment in India," IZA Discussion Papers 10198, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Market Exchange; Norms; Optimality; Labour Market;
    All these keywords.

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • D1 - Microeconomics - - Household Behavior
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • 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
    • P00 - Political Economy and Comparative Economic Systems - - General - - - General

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