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What Has Economics to Say about Racial Discrimination?


  • Kenneth J. Arrow


Racial discrimination pervades every aspect of a society in which it is found. It is found above all in attitudes of both races, but also in social relations, in intermarriage, in residential location, and, frequently, in legal barriers. It is also found in levels of economic accomplishment; that is, income, wages, prices paid, and credit extended. It is natural to suppose that economic analysis can cast light on the economic effects of racial discrimination. But the pervasiveness of the phenomenon must give us pause. Can a phenomenon manifest everywhere in the social world really be understood, even in only one aspect, by the tools of a single discipline? I want to explore here the scope and limits of ordinary economic analysis for understanding racial discrimination even in markets.

Suggested Citation

  • Kenneth J. Arrow, 1998. "What Has Economics to Say about Racial Discrimination?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 91-100, Spring.
  • Handle: RePEc:aea:jecper:v:12:y:1998:i:2:p:91-100 Note: DOI: 10.1257/jep.12.2.91

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    References listed on IDEAS

    1. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 507-548.
    2. George J. Borjas, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 123-150.
    3. Steven N. Durlauf, 1997. "The Memberships Theory of Inequality: Ideas and Implications," Research in Economics 97-05-047e, Santa Fe Institute.
    4. Lawrence Blume, 1996. "Population Games," Game Theory and Information 9607001, EconWPA.
    5. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Working Papers 0047, University of Washington, Department of Economics.
    6. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
    7. T. de Scitovszky, 1943. "A Note on Profit Maximisation and its Implications," Review of Economic Studies, Oxford University Press, vol. 11(1), pages 57-60.
    8. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    9. Frank Hahn & Robert Solow, 1997. "A Critical Essay on Modern Macroeconomic Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 026258154x, July.
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    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination


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