4.1.6.7 Discrimination in the labour market

Discrimination:

When workers with the same skills and productivity are treated differently based on characteristics like gender, race or age.

Conditions

• Imperfect competition - employers have some power over hiring and setting wages

• Imperfect info. - biases or stereotypes influence decisions

• Preferences or prejudices by employers, colleagues, or customers leading to unequal pay or job opportunities

discrimination can result in lower wages, fiver promotions, or difficulty in getting hired for affected groups

lower wages, fiver promotions, or difficulty in getting hired for affected groups

Equality act 2010 protects workers from unfair treatment

Discrimination in the labour market can be shown using a Wage determination diagram with the marginal revenue product of labour (MRPL) curve

If employers discriminate against women, they may perceive their MRPL as lower, even when productivity is the same leading to a lower wage for female workers

This shifts the demand curve for female labour leftward reducing equilibriums wages compared to male workers

If gender discrimination takes place in one labor market, other labour markets in which no discrimination is taking place will also be affected

In these markets, the supply curve of female workers increase (S1-S2) as a direct result of discrimination taking place in the first labour market, lowering wages in this labor market