Discrimination in the Labour Market

Where groups of workers are treated differently to other workers in the same job regarding pay and employment.

Wage discrimination - Paying workers different wage rates for doing the same job

Conditions required

• Requires employers to be able to identify and separate different workers supplying the same type of labour.
• This is possible when workers differ in their knowledge of the labour market and their ability to shop around employers.

Example

MRP is the perfect labour market. MRP₁ is the perceived MRP of the discriminated group. They are seen as less productive than they actually are, so they are employed less Q₁ instead of Q, and paid less W₁ instead of W.

Solutions

• Legislation
• Voluntary commitments