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Discrimination in the Labour Market

Discrimination in the Labour Market. Aims and Objectives. Aim: Understand discrimination in the labour market Objectives: Define labour market discrimination Explain the reasons for discrimination Analyse the effects of discrimination Evaluate government policy to alleviate discrimination.

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Discrimination in the Labour Market

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  1. Discrimination in the Labour Market

  2. Aims and Objectives Aim: • Understand discrimination in the labour market Objectives: • Define labour market discrimination • Explain the reasons for discrimination • Analyse the effects of discrimination • Evaluate government policy to alleviate discrimination

  3. Starter • How may discrimination occur in the labour market? • Define market failure.

  4. Discrimination • Occurs when a group of workers/potential workers are treated differently to other workers doing the same job, in terms of promotion, pay, working conditions. • Can be positive or negative. • Causes market failure as market fails to allocate resources efficiently.

  5. Who would you employ?

  6. Negative Discrimination • Occurs when similar workers are treated less favourable than others, and are paid lower wages because of race, gender, age or disability. • Why might employers discriminate in the labour market? • Prejudice leads to employers believing that the MRP of these groups is lower than it really is. • E.g. MRP of women is lower than that of men.

  7. Negative Discrimination Discrimination against women results in lower wages S Wage Rate/MRP W1 W2 MRP1 MRP2 (Discrimination) Quantity of Female Workers Q2 Q1

  8. Costs of Negative Discrimination

  9. Negative Discrimination • Could also affect supply side if workers who are discriminated against look for employment in other markets, with other employers. • Resulting in an increase in the supply of labour to the non discriminating firm, leading to lower wages for the discriminated group.

  10. Positive Discrimination • Firms discriminating in favour of a certain group. • Employers judge the MRP of a particular group to be higher than it actually is. • Some groups will earn higher wages than others of similar ability.

  11. Government & Positive Discrimination • Governments can positively discriminate to offset negative discrimination effects. • Conservatives launched ‘Equal Pay and Flexible Working Act’ to address the male: female pay gap. • Does this work? • http://news.bbc.co.uk/1/hi/england/8492366.stm • http://news.bbc.co.uk/1/hi/programmes/politics_show/regions/west_midlands/8313171.stm

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