Occupational Discrimination and Equal Opportunities Legislation

In the last chapter it was noted that equal pay and equal opportunity measures are essentially complementary policy tools, and several countries have found it necessary to legislate in both areas. For the danger of legislation to enforce equal payment between the sexes in isolation and without full regard to the long-run relative costs of employment of each type of labour from the point of view of the individual enterprise is that inequality of opportunity may be intensified as the access of females to particular types of employment becomes even more difficult. As noted by one investigator1 there is a clear theoretical rationale for such actions, for a fundamental theorem of economic analysis states that a change in relative price leads to a substitution away from the good whose relative price has risen. In this context the passage of a fair employment law adds an expected cost to firms and unions that are violating either the segregation or wage differential provision of the law, and induces a substitution away from discriminatory behaviour. The magnitude of the expected cost equals the cost of violating the fair employment law if one is caught (e.g. adverse publicity, costly litigation, possible fines and imprisonment) times the probability of apprehension.