Key terms
- Labour market discrimination
- Labour market discrimination arises when workers with the same education, experience and expertise receive different pay or job opportunities because of their race or gender.
- Earnings gap
- An earnings gap is a difference between the average wages of two groups, which on its own does not prove discrimination.
Becker argued that competition makes discrimination costly
Gary Becker, who won the Nobel Prize in economics in 1992, was one of the first to analyse discrimination in economic terms. If some employers refuse to pay women or minority workers a wage based on their productivity, other profit-seeking employers can hire those workers. In a competitive market, a firm that cares more about profit than prejudice has an incentive to hire and promote on economic grounds alone.