Some argue that the government doesn\'t need affirmative action programs or othe

Question

Some argue that the government doesn't need affirmative action programs or other anti-discrimination policies because the profit motive provides sufficient motivation to eliminate discrimination in employment. (Respond to each statement with 2-3 sentences)

a. Explain this argument.

b. Explain why this might NOT happen i.e. why discrimination might continue even where employers are motivated by profits.

c. Affirmative action admissions policies help minorities who would otherwise be unable to get into a selective university to attend the university. What effect might such a policy have on the black/white wage gap? Explain.

d.   Under statistical discrimination how would you expect affirmative action admissions policies to change the wages of minority college graduates?

e. Is there a theory of discrimination in which affirmative action admissions policies increase the wages of minority college graduates? Explain.

Explanation / Answer

a. Suppose there are two types of workers type-1 workers and type-2 workers. There is discrimination and type-1 workers are favored. Due to that, the demand for type-1 workers is higher and the their wage rate is also higher. But in competitive markets, this gives non-discriminating firms to employ type-2 workers and produce at lower costs and eventually drive discriminating firms out of market.

b. Sometimes profit motive is not enough and discrimination continues to exist. One reason as to why this might happen is discriminatory consumer preferences. Suppose that for the job of waiting tables, there are two types of waiters: type1 waiters and type2 waiters. Type 2 waiters are paid less as they are discriminated against. In this case, non-discriminating restaurants can drive discriminating restautants out of the market but if the consumer preferences are such that they want to be served by the type-1 workers and are thus ready to pay higher when they are served by type 1 workers, discrimination will persist and profit motive won't be sifficient to end discrimination in the market.

c. Wage rate is determined by many factors, and color is just one of those factors. The most important determining factor is worker ability. If Black workers are discriminated against and their wage rate is therefore lower, their wage can come at par with (and even surpass) those of white workers if they are made more capable in terms of revenue generation to the firms. Therefore, affirmative action admission policies can close the black/white wage gap.

d. Affirmative action policies can raise the standard of living of the discriminated population but it is not really an intrument that ends discrimination. To end discrimination, the mindset in the society will have to change.

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