Research Handbooks in Law and Economics series
Edited by Cynthia L. Estlund and Michael L. Wachter
Chapter 13: Antidiscrimination in employment: the simple, the complex, and the paradoxical
A paradox lies at the heart of employment discrimination law. Why would an employer choose to discriminate against any qualified potential employee? After all, any unilateral employer decision to limit the range of potential qualified applicants necessarily constricts the supply of labor. Any employer indulging such a “taste for discrimination” (Becker, 1971) on the basis of antipathy for a particular group (as with black applicants) or a mistaken indulgence in stereotyped thinking about the abilities of a group to perform certain work (as with women) would find the applicant pool limited and the cost of labor correspondingly increased. To the extent that such discriminatory behavior was widespread, the wage premium to the preferred group would also then rise. Under such circumstances, the market should serve as a strong corrective force. Any employer freed from the stereotyped rejection of qualified employees would find a broader pool of potential workers and would presumably save on labor costs. Without having to pay the premium for this undesirable indulgence in discrimination, the tolerant employer would have an advantage in the market for goods and services. Generalized across the economy, a competitive market should squeeze the margins necessary for any employer’s willingness to indulge inefficient discrimination.
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