What Is Economic Discrimination?

Economics of discrimination: One source of wage differentials is discrimination. Discrimination occurs when markets offer different opportunities to similar individuals who differ only in race, religion, gender, age, or other personal characteristics. Discrimination reflects the prejudice of certain people against a social group. Although discrimination is an emotional topic that often causes intense debate, economists have sought to study this subject objectively in order to separate illusions from reality.

Economics of discrimination

(Socioeconomic concept)

Right!

Economics of discrimination:

Measurement of labor market discrimination

How much does discrimination in the labor market affect the income of different groups of workers? This question is important, but it is not easy to answer.

By observing the different groups

But this method has an obvious problem. Even in a non-discriminatory labor market,

Actually, in explaining

Introduction to Discrimination Economics

Discrimination in sports

As we have shown, measuring discrimination is often difficult. To determine whether a group of workers is discriminated against, researchers must correct for differences in productivity between that group and other workers in the economy. But in most enterprises, it is difficult to measure the contribution of a worker to the production of goods and services.

One type of business where this correction is easier to make is a sports team. Professional sports teams have many objective criteria for measuring productivity. For example, in baseball, we can measure the average shooting percentage of an athlete, the frequency of returning bases, the number of offenses, and so on.

Economic Analysis of Discrimination

Research on sports teams shows that racism is actually widespread and that most of the crimes lie with customers. A study published in the Journal of Labor Economics in 1988 examined the salary of basketball players. It found that black athletes earned 20% less than comparable white athletes. The study also found that white players accounted for most of the team's audience in basketball games. One explanation for this fact is that customer discrimination has made black athletes make less money for team owners than white athletes. In the presence of this customer discrimination, this discriminatory wage differential will persist even if the team owner is only concerned about profits.

A similar situation existed among baseball players. A study using data from the late 1960s shows that black athletes earn less than comparable white athletes. In addition, even though black pitchers have better records than white pitchers, there are fewer fans watching black pitchers than white pitchers. However, recent research on baseball player wages has found no evidence of discriminatory wage differences.

Another study published in the Economic Quarterly in 1990 examined the market price of veteran baseball player cards. The study found similar evidence of discrimination. Black batsman cards sell for 10% less than comparable white batsman cards. Black pitcher cards sell for 13% less than comparable white pitcher cards. These conclusions point to customer discrimination among baseball fans. From The Economics of Discrimination by Mankun