Cover: Some Models of Racial Discrimination in the Labor Market

Some Models of Racial Discrimination in the Labor Market

Published 1971

by Kenneth Arrow


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Part of a RAND study on the measurement of racial discrimination in the economic sphere. Although neoclassical theory can offer a coherent and plausible explanation of the impact of racial discrimination and accounts in a gross way for the known facts, some problems remain. This Memorandum describes a simple model by which an employer can purchase black labor at a fixed price; for this labor he must choose some point on an indifference curve between wages and the proportion of whites in the firm. The implications — no wage differentials on the one hand and segregation on the other — are respectively contrary to and harmonious with observation. Thus, there is a failure of convexity — extreme alternatives are preferred to compromises. Technical analysis of the model is presented in notes following the text.

This report is part of the RAND research memorandum series. The Research Memorandum was a product of RAND from 1948 to 1973 that represented working papers meant to report current results of RAND research to appropriate audiences.

This research in the public interest was supported by RAND, using discretionary funds made possible by the generosity of RAND's donors, the fees earned on client-funded research, and independent research and development (IR&D) funds provided by the Department of Defense.

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