Discrimination

1. Discrimination Theories of Discrimination Cost of Segregation Economic Models of Labor Market Discrimination

2. Theories of Discrimination • Marxist: Discrimination a Smoke Screen • Capitalists want to divide working class • Use media, church, state to inculcate "values" • Can segregate by race, sex, ethnicity • Could be anything (earlobes, noses, skin color?) • Keep Irish & Italian workers in the 19thC ghetto • Segregation reduces workers opp'ty cost • Low opportunity cost creates low wage bills

3. Theories of Discrimination (2) • Psychological theories • a) Mistaken beliefs (remedy is education) • b) Ancient roots stemming for warring tribes • Here come the Huns! the Vikings! the Saxons! • effectiveness enhanced by physical similarity • remedy more problematic if tastes are "hard-wired"

4. Neoclassical Economic Theory • Take prejudicial tastes as given • They exist, so lets analyze the consequences • Simple form: preference for one's own type • More complicated forms: political/economic • S. Carolina in 1870: white property owners' wealth threatened by votes of majority black freemen • Economic Lesson: acting on basis of prejudice typically involves a cost

5. Cost of Segregation: MLB • Baseball has legal cartel • League enforced all-white policy since 1890s (why?) • Bill Veeck foiled in 1944 • tried to buy Phillies & stock w/ black players • owners blocked, and sold Phillies for lower price • Jackie Robinson integrated baseball w/ Dodgers • Veeck soon hired Larry Doby & Satchel Paige • Teams that integrated first improved the most • Dodgers, Giants, Indians, & Braves • Cost of Prejudice in MLB of the 1950s • Market competition is a force opposing segregation

6. Cost of Segregation: NCAA CFB • Consider 1964 Univ. Alabama football team • Very good – (nat'l champion) – and very white • Ala begins losing to integrated teams • 1970: Sam “Bam” Cunningham of Southern Cal scores 5 TD’s against them on national TV • 1971: Team accepts 1st black players • Wins Titles again in mid-late 1970s • Cost of segregation became too great • Sports became most integrated part of Ala

7. Model of Employer Discrimination • Employers favor one group • may be paternalism • English have capital & favor own kids over Irish • Assume an extra psychological cost to employing Irish: dI • dI is a non-wage hiring cost • Cost of employing English is just monetary • DE is greater than DI w dI DE DI Q

8. Market Equilibrium w/ Employer Discrimination • Let supply of labor of two groups be same • Assume employers can segregate Irish from English • Taste for discrimination favors English workers • they gain higher employment & wages than in non-discriminatory equilibrium • Irish suffer lower employment & lower wages w SE = SI wE* wI* DE DI SI* Q SE*

9. A Profit Opportunity for Non-Discriminatory Employers • DE measures MRP • At QI*, MRPI exceeds wE* • MRPI - WI* is a profit opportunity for non-discriminatory employers • Entry & Competition increase wages & employment of Irish • Lower costs of non-discriminatory firms give them an edge in product market competition • Competitive markets eliminate discrimination w SE = SI MRPI wE* wI* DE DI QI* Q QE*

10. Employee Discrimination • Assume workers prefer working with own type • perceive a cost (d) from working in mixed group • we = (1-d)w0 • we = effective wage • w0 = money wage • "real" or "effective" wage is reduced in mixed group • requires higher pay to attract workers to mixed group • Q: What would employers do? • it depends

11. Employee Discrimination (2) • Segregation vs Discrimination • Voluntary segregation • all workers prefer to work w/ own type & are more productive doing so • Chinese & Mexican restaurants; workers self-segregate • Discrimination • dominant group inhibits employers from hiring minority group members that are equally or more productive • employer would hire minorities but is deterred by workers • again, segregated firms is result, but involuntary • Example: Dodgers & Jackie Robinson • Al Gionfriddo hired to take locker next to Robinson • Fights on the field w/ opponents

12. Customer Discrimination • Fans want to trade / watch own type • White people are biggest, richest group in U.S. • Pay (modest) premium in card market for cards of white players • Owners believed same prejudice extends to composition of team • What if employer punished for tolerance? • Old Redskins: “Burgundy, Gold, and Caucasian” in D.C. • Allegedly catering to discriminatory (southern) audience • Note also that George Marshall (owner) was an inveterate racist • Tough problem for free markets: competition caters to discrimination in this case

13. Sex Discrimination • Harder to measure in sport than elsewhere • Men & women seldom in same venue • Often don’t play same sport • Direct competition: Jockeys & auto racing • Women’s Basketball (Golf, Soccer) • A different sport: designed to protect women • competition ceases to be interesting if men allowed • Women not always victims • Female gymnasts and figure skaters benefit from taste for their performances relative to males

14. Title IX • Part of 1972 Education Legislation • Mandates equal access & opportunity for women in fed-funded education programs • 3 ways to comply • Funding proportional to enrollments • Program shows history of expansion • Interests of students accommodated

15. Impacts of Title IX • Compliance is quite limited; progress is slow • Good • Spurred growth in women’s sports • Gave grounds to seek remediation outside school • Bad • Trappings of “big-time”: NCAA vs AIAW • What happened to women coaches? • Was ~80% of women’s programs - now much lower • Can meet T9 requirements in many ways: • Cut men’s programs rather than expanding women’s