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Minimum Wage and Pure Discrimination: A Note

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  • Robert Cherry

    (CUNY)

Abstract

When two groups of workers are imperfect substitutes, a minimum wage increase does not necessarily increase discriminatory hirings. A Becker model with imperfect substitutes demonstrates that discrimination is determined by the rate of change of substitutability between the two groups. Only if the rate of change declines when additional workers are employed would a minimum wage increase intensify discriminations. This model also presents the equilibrium conditions that determine the number of less qualified workers from the preferred group hired when total employment is fixed.

Suggested Citation

  • Robert Cherry, 1989. "Minimum Wage and Pure Discrimination: A Note," Eastern Economic Journal, Eastern Economic Association, vol. 15(1), pages 55-62, Jan-Mar.
    • Handle: RePEc:eej:eeconj:v:15:y:1989:i:1:p:55-62
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume15/V15N1P55_62.pdf
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    References listed on IDEAS

    as
    1. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, September.
    2. Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
    3. Barbara R. Bergmann, 1974. "Occupational Segregation, Wages and Profits When Employers Discriminate by Race or Sex," Eastern Economic Journal, Eastern Economic Association, vol. 1(2), pages 103-110, April.
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