Figure 14-3 The Effect of Discrimination on Wages
Now suppose discrimination enters in an extreme form: All E occupations
are hereafter open only to men, but O occupations are open to either men
or women. The immediate effect is to reduce by 50 percent the supply of
job candidates for E occupations; all previously qualified female
candidates are no longer eligible because candidates must now be both
men and above average. The discrimination also increases the supply of
applicants for O jobs because the women who cannot be employed in E
jobs move instead to get O jobs. The new group of O-job candidates now
includes all women and the below-average men. As shown in Figure
3 , wages rise in E occupations and fall in O occupations.
If market E discriminates against one group and market O does not,
wages will rise in E and fall in O. Market E requires above-average skills,
while market O requires only ordinary skills. When there is no
discrimination, demand and supply are and in market E and
and in market O. Initially, the wage rate is and employment is
each market. ( in market E is higher than in market O because the
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