Question

In the taste-for-discrimination model, an increase in employer prejudice against African-American workers would cause the discrimination coefficient to________ and demand curve for African-American labor to shift________. a. Decrease; right. b. Decrease; left. c. Increase; right. d. Increase; left.

Short answer

The answer is d: Increase; left.

Step-by-step solution

Understanding the Discrimination Coefficient

In the taste-for-discrimination model, the discrimination coefficient (d) represents the employer's level of prejudice. An increase in employer prejudice would logically mean an increase in the discrimination coefficient because the employer's subjective cost of hiring African-American workers increases.

Analyzing the Demand Curve for African-American Labor

As the discrimination coefficient increases, employers view African-American workers as more costly in terms of their prejudice, even if the actual wage remains unchanged. As a result, their demand for African-American workers decreases, causing the demand curve for African-American labor to shift to the left.

Final Answer Selection

Based on the analysis, an increase in prejudice leads to an increase in the discrimination coefficient and a leftward shift in the demand curve. This matches choice 'd': Increase; left.

Key concepts

Discrimination Coefficient

The discrimination coefficient is a concept within the taste-for-discrimination model. Developed by economist Gary Becker, it helps us understand employer bias in the labor market. This coefficient acts as a measure of prejudice.
The higher the discrimination coefficient, the more prejudice the employer holds. It quantitatively signifies how much more an employer is willing to pay to avoid hiring certain groups of workers, like African-Americans.
The meaning here is simple: if prejudice increases, so does the discrimination coefficient. This implies that employers see hiring certain workers as more costly, not because of actual wages but due to their subjective bias. Understanding this coefficient is crucial as it directly affects employment decisions and overall labor market dynamics.

Labor Demand Curve

The labor demand curve represents how many workers employers are willing to hire at different wage levels. It reflects the relationship between the wage rate and the quantity of labor demanded by employers.

• If wages increase, the quantity of labor demanded decreases, shifting the curve to the left.
• Similarly, if wages decrease, the demand increases, shifting the curve to the right.

When prejudice, as marked by the discrimination coefficient, increases, even if wages do not actually change, the perceived cost is higher. Hence, employers demand fewer African-American workers, pushing the demand curve for this group to the left. Understanding how prejudice influences this curve helps to predict changes in employment rates and economic health.

Employer Prejudice

Employer prejudice refers to the biases and negative attitudes that employers might have against certain racial or ethnic groups. This prejudice affects their hiring decisions and can lead to inequities in the labor market.
When prejudice against African-American labor increases, it affects how employers perceive costs. They tend to hire fewer workers from the prejudiced group due to perceived inefficiencies or biases, despite wage parity.

The Effects of Employer Prejudice

- Increased prejudice means a decrease in demand for African-American workers. - It contributes to systemic barriers in the workforce. - This bias isn't based on worker performance but on irrelevant factors like race.

African-American Labor

African-American labor refers to the participation and contribution of African-Americans in the workforce. In the face of employer prejudice, opportunities for African-American workers can be unfairly limited, regardless of their skills or qualifications.
The influence of discrimination on African-American labor is multifaceted. It not only leads to reduced employment opportunities but also to larger economic disparities between racial groups. This includes:

• Lower employment rates.
• Reduced income levels.
• Diminished advancement opportunities.

Efforts to reduce discrimination involve policy changes, education reform, and cultural shifts to foster a more inclusive and equitable job market. Recognizing and addressing these biases can improve labor market fairness and economic growth.