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Wage discrimination as an illegal behavior

Author

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  • Yossi Tobol

    (Department of Economics, Bar-Ilan University, Israel)

Abstract

Paying different wages to workers of equal productivity because of demographic groups to which they belong is illegal in the US and other Western countries. Yet, the vast economic literature on wage discrimination has entirely overlooked this fact when modeling the employer's discriminatory behavior. Consequently, the desirability of practicing wage discrimination, whether arising from differences in labor supply elasticities or from an inherent taste for discrimination, has never been confronted with the risk of getting caught and punished due to violating the equal pay law. Incorporating this risk into Joan Robinson''s (1969) discriminatory monopsony model and Gary Becker''s (1971) taste-for-discrimination model, this paper examines the effects that illegalizing wage discrimination may have on the wage differential under discriminatory monopsonistic and competitive conditions. The analysis unveils a sharp contrast in the effect of illegalization in the alternative settings.

Suggested Citation

  • Yossi Tobol, 2005. "Wage discrimination as an illegal behavior," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-05j70001
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    Citations

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    Cited by:

    1. Jellal, Mohamed, 2009. "Entrepreneurship and Compliance With Minimum Wage Law," MPRA Paper 17156, University Library of Munich, Germany.
    2. Jellal, Mohamed, 2012. "A theory of compliance with minimum wage legislation," MPRA Paper 39499, University Library of Munich, Germany.
    3. Simplice Anutechia Asongu & Mohamed Jellal, 2014. "A Theory of Compliance with Minimum Wage Law," AAYE Policy Research Working Paper Series 14_020, Association of African Young Economists, revised Nov 2014.
    4. Yang-Ming Chang & Bhavneet Walia, 2007. "Wage discrimination and partial compliance with the minimum wage law," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-7.
    5. repec:ebl:ecbull:v:10:y:2007:i:4:p:1-7 is not listed on IDEAS

    More about this item

    Keywords

    Illegal Behavior;

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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