Discrimination in the Labour Market

Aims and Objectives Aim: Understand discrimination in the labour market Objectives: Define labour market discrimination Explain the reasons for discrimination Analyse the effects of discrimination Evaluate government policy to alleviate discrimination

Starter How may discrimination occur in the labour market? Define market failure.

Discrimination Occurs when a group of workers/potential workers are treated differently to other workers doing the same job, in terms of promotion, pay, working conditions. Can be positive or negative. Causes market failure as market fails to allocate resources efficiently.

Who would you employ?

Negative Discrimination Occurs when similar workers are treated less favourable than others, and are paid lower wages because of race, gender, age or disability. Why might employers discriminate in the labour market? Prejudice leads to employers believing that the MRP of these groups is lower than it really is. E.g. MRP of women is lower than that of men.

Negative Discrimination Discrimination against women results in lower wages S Wage Rate/MRP Quantity of Female Workers MRP1 MRP2 (Discrimination) W2 W1 Q2Q1

Costs of Negative Discrimination Impacts Individuals Discriminated groups may resort to taking less demanding jobs than they are qualified to do. May not be considered for promotion, and therefore may not apply for more senior roles. Impacts Firms May have less workers to chose from if they discriminate, which will increase their production costs and damage international competitiveness. Higher costs passed on to consumers. Impacts Economy Government may have to increase welfare benefits to support discriminated groups Opportunity cost if time and money spent on discrimination legislation and tackling social tension.

Negative Discrimination Could also affect supply side if workers who are discriminated against look for employment in other markets, with other employers. Resulting in an increase in the supply of labour to the non discriminating firm, leading to lower wages for the discriminated group.

Positive Discrimination Firms discriminating in favour of a certain group. Employers judge the MRP of a particular group to be higher than it actually is. Some groups will earn higher wages than others of similar ability.

Government & Positive Discrimination Governments can positively discriminate to offset negative discrimination effects. Conservatives launched ‘Equal Pay and Flexible Working Act’ to address the male: female pay gap. Does this work? ow/regions/west_midlands/ stm ow/regions/west_midlands/ stm