ABSTRACT
In the basic model of the labour market, labour at each skill level is homogeneous. Labour market discrimination may take the form of either assigning equally productive workers to jobs of different skill levels (employment discrimination) or paying them different wages for doing the same job (wage discrimination). Discrimination can persist if the discriminating firm is in an imperfectly competitive industry, in which the pressure to behave as a profit maximiser is less than total. We have seen that neoclassical models in which employers or employees have a taste for discrimination yield a number of predictions concerning the labour market position of minority workers. The model of employment discrimination as stated so far predicts discrimination to be a purely transitory phenomenon. The discriminatory employer and supervisor eventually price themselves out of the market and the discriminating employee merely achieves separation from equally well-paid B employees.
