workers in E have higher skills than those in O. This is an equilibrium
wage differential.)
Since men and women have the same distribution of skills, the average
male wage is equal to the average female wage. When discrimination
excludes women from E occupations, the supply curve shifts to and
the wage earned by the remaining workers, all of whom are men, rises to
Women ineligible for work in the E occupations now seek work in the
O occupations. The resulting shift in the supply curve to reduces the
wage to in the O occupations. Because all women are now in O
occupations, they have a lower wage rate than many men. The average
male wage in the economy is now higher than the average female wage—
purely because of discrimination.
Labour-market discrimination, by changing supply, decreases the wages of a group that is
discriminated against and increases the wages of the “favoured” group.In the longer run, further changes may occur. Employers that continue to
discriminate against women may find ways to attract the slightly below-
average male workers away from the O occupations. Although this will
raise O wages slightly, it will also make these occupations increasingly
“female occupations.” If discrimination has been in place for a sufficient
length of time, women will learn that it does not pay to acquire above-
average skills because even with such skills they cannot get the best jobs.
Regardless of ability, women are forced by discrimination to work in
unskilled jobs.
Temporary or Equilibrium Differentials?
The final point to address regarding labour-market discrimination is
whether discriminatory wage differentials are equilibrium or temporary
SE′,w 1.
SO′
w 2