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Customer Discrimination and Affirmative Action

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  • Kahn, Lawrence M

Abstract

This paper shows that, under constant returns to scale and free entry, customer discrimination, unlike employer or employee discrimination, can cause long-run wage differentials. The general equilibrium impact of affirmative action policies on wages, productivity, and unemployment is contrasted under these types of discrimination. The empirical literature on affirmative action is surveyed in light of these models and some support is found for models of employer prejudice. Finally, by changing the composition of output, affirmative action policies raise the probability of a nondiscriminatory general equilibrium outcome under customer prejudice. Copyright 1991 by Oxford University Press.

Suggested Citation

  • Kahn, Lawrence M, 1991. "Customer Discrimination and Affirmative Action," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 555-571, July.
  • Handle: RePEc:oup:ecinqu:v:29:y:1991:i:3:p:555-71
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    Cited by:

    1. Stanley R. Keil & Lee C. Spector, 2005. "The Impact of Wal-Mart on Employment Andwage Differentials in Alabama," Working Papers 200508, Ball State University, Department of Economics, revised Dec 2005.
    2. Lundberg, S.J. & Startz, R., 1996. "Inequality and Race: Models and Policy," Discussion Papers in Economics at the University of Washington 96-04, Department of Economics at the University of Washington.
    3. Bodvarsson, Őrn B. & Papps, Kerry L. & Sessions, John G., 2014. "Cross-assignment discrimination in pay: A test case of major league baseball," Labour Economics, Elsevier, vol. 28(C), pages 84-95.
    4. Chen, Hung-Ju & Sultana, Rezina, 2013. "Job Reservation and Intergenerational Transmission of Preferences," MPRA Paper 45036, University Library of Munich, Germany.
    5. Ilan Tojerow, 2008. "Industry Wage Differentials Rent Sharing and Gender in Belgium," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(3), pages 55-65.
    6. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
    7. John S. Heywood & Daniel Parent, 2012. "Performance Pay and the White-Black Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 249-290.
    8. Moro, Andrea & Norman, Peter, 2003. "Affirmative action in a competitive economy," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 567-594, March.
    9. Depken II, Craig A. & Ford, Jon M., 2006. "Customer-based discrimination against major league baseball players: Additional evidence from All-star ballots," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(6), pages 1061-1077, December.
    10. Rulof Burger & Rachel Jafta, 2006. "Returns to Race: Labour Market Discrimination in Post-Apartheid South Africa," Working Papers 04/2006, Stellenbosch University, Department of Economics.
    11. Moser, Petra, 2012. "Taste-based discrimination evidence from a shift in ethnic preferences after WWI," Explorations in Economic History, Elsevier, vol. 49(2), pages 167-188.
    12. David W. Findlay & John M. Santos, 2012. "Race, Ethnicity, and Baseball Card Prices: A Replication, Correction, and Extension of Hewitt, Muñoz, Oliver, and Regoli," Econ Journal Watch, Econ Journal Watch, vol. 9(2), pages 122-140, May.
    13. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.
    14. Matthew Parrett, 2011. "Customer Discrimination in Restaurants: Dining Frequency Matters," Journal of Labor Research, Springer, vol. 32(2), pages 87-112, June.
    15. Bodvarsson, Orn B. & Sessions, John G., 2011. "The measurement of pay discrimination between job assignments," Labour Economics, Elsevier, vol. 18(3), pages 297-309, June.
    16. Hoang, Ha & Rascher, Dan, 1999. "The NBA, Exit Discrimination, and Career Earnings," MPRA Paper 3542, University Library of Munich, Germany.
    17. Bodvarsson, Orn B. & Partridge, Mark D., 2001. "A supply and demand model of co-worker, employer and customer discrimination," Labour Economics, Elsevier, vol. 8(3), pages 389-416, June.
    18. DeBeaumont, Ronald, 2009. "Occupational differences in the wage penalty for obese women," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 344-349, March.
    19. Bodvarsson, Örn B. & Sessions, John G., 2008. "The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test," IZA Discussion Papers 3748, Institute for the Study of Labor (IZA).

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