Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 6 The Economics of Labor Markets
Chapter 19 of 36 Earnings and Discrimination
Section 14 of 15
…
The profit motive is a strong force for eliminating discriminatory wage differentials.
But there are limits to its corrective abilities.
Two main limiting factors are customer preferences and government policies.
…
Consider again an imaginary economy with blondes and brunettes.
Suppose restaurant owners discriminate against blondes when hiring waiters even though they are just as qualified as brunettes.
As a result, blonde waiters earn lower wages than brunette waiters.
In this case, a new competing restaurant can open up with blonde waiters and charge lower prices.
If customers care only about the quality and price of their meals and not about hair color the discriminatory firms will be driven out of business because of their higher prices and the wage differential will disappear.
…
It’s possible most customers are brunette and prefer being served by brunette waiters.
If this preference for discrimination is strong the entry of blonde restaurants
need not eliminate the wage differential between brunettes and blondes.
When customers have discriminatory preferences, a competitive market can have a discriminatory wage differential.
…
An economy with such customer discrimination would have two types of restaurants
· blonde restaurants that hire blondes at a lower wage, have lower costs, and charge lower prices
· brunette restaurants that hire brunettes at a higher wage, have higher costs, and charge higher prices
Unbigoted customers who did not care about the hair color of their waiters
would be attracted to the lower prices at the blonde restaurants.
Bigoted customers would go to the brunette restaurants and would pay higher prices because of their discrimination.
…
Another way for discrimination to persist in competitive markets is for government to pass and enforce discriminatory laws.
If the government passed a law stating blondes could wash dishes in restaurants but could not work as waiters then a wage differential could persist.
Before South Africa ended its system of apartheid, blacks were prohibited from working in some jobs.
The effect of governments passing such discriminatory laws is to disable the natural equalizing force of free, competitive markets.
…
Competitive markets have a natural remedy for employer discrimination: the entry into the market of firms that care mainly about profit reduces and then eliminates non-economic discriminatory wage differentials.
Discriminatory wage differentials persist in competitive markets only when
· customers have discriminatory preferences
· government mandates discrimination
… …
brunette and blonde
burunetto to burondo
ブルネットとブロンド

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