Key Concepts and Summary

Key Concepts and Summary

Discrimination occurs in a labor market when workers with the same economic characteristics, such as education, experience, and skill, are paid different amounts because of race, gender, religion, age, or disability status. In the United States, female workers on average earn less than male workers, and black workers on average earn less than white workers. There is controversy over the extent to which these earnings gaps can be explained by discrimination or by differences in factors like education and job experience. Free markets can allow discrimination to occur; but the threat of a loss of sales or a loss of productive workers can also create incentives for a firm not to discriminate. A range of public policies can be used to reduce earnings gaps between men and women or between white and other racial/ethnic groups: requiring equal pay for equal work, and attaining more equal educational outcomes.

Glossary

affirmative action

active efforts by government or businesses that give special rights to minorities in hiring, promotion, or access to education to make up for past discrimination

discrimination

actions based on the belief that members of a certain group or groups are in some way inferior solely because of a factor such as race, gender, or religion