Employer discrimination and market structure: Does more concentration mean more discrimination?

Josh Ederington, Jeremy Sandford

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

We formalize Gary Becker's dynamic conjecture that competitive forces drive discriminating employers from the market in the long run, using a dynamic model of a monopolistically competitive industry characterized by sunk costs and sequential entry. An advantage of this formalization is that it demonstrates the importance of the structure of production costs, as well as market power, in explaining the long-run survival of discriminatory firms. In addition, we show that, despite decades of empirical research on this connection, there is no consistent theoretical relationship between the degree of market concentration within an industry and the degree of discrimination. However, we do find an indirect link in which market liberalization has a more pronounced effect in reducing discrimination in more concentrated markets.

Original languageEnglish
Pages (from-to)1-33
Number of pages33
JournalInternational Journal of Industrial Organization
Volume48
DOIs
StatePublished - Sep 1 2016

Bibliographical note

Publisher Copyright:
© 2016 Elsevier B.V. All rights reserved.

Keywords

  • Discriminationse
  • Market concentration
  • Market structure

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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