REDUCING LABOR MARKET DISCRIMINATION

Over the last 35 years, governments have taken numerous steps to end discriminatory practices. But even today, the United States has been unable to eradicate discrimination based on race, gender, and other characteristics. What approaches have been available to combat discrimination? The major steps were legal landmarks, such as the Civil Rights Act of 1964 (which outlaws discrimination in hiring, firing, and employment) and the Equal Pay Act of 1963 (which requires that employers pay men and women equally for the same work).

Such laws helped dismantle the most blatant discriminatory practices, but more subtle barriers remain. To counter them, more aggressil’e and controversial policies have been introduced, including measures such as affirmative action. This requires that employers show they are taking extra steps to locate and hire underrepresented groups. Studies indicate that this approach has had a modest positive effect on the hiring-and wages of women and minorities.

Affirmative action has, however, been widely criticized in recent years as representing “reverse discrimination;” and some states have banned its use in employment and education. Often, discrimination can be combated by encouraging employers to pay more attention to personal performance; If statistical discrimination tends to harm women and minority groups and reduce incentives to invest in human capital, discrimination will be reduced if employers look at measures of personal skills such as school grades as well as teacher and employer recommendations. It is instructive to note that. in those industries where individual performances are more easily measured-such as athletics and entertainment-women .and minorities are relatively more highly paid than in those sectors where skills and marginal products are harder to measure and. there is consequently more room for statistical and personal discrimination.

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