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CUSTOMER DISCRIMINATION AND AFFIRMATIVE ACTION
Author(s) -
KAHN LAWRENCE M.
Publication year - 1991
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1991.tb00846.x
Subject(s) - affirmative action , involuntary unemployment , prejudice (legal term) , economics , unemployment , productivity , labour economics , wage , returns to scale , microeconomics , production (economics) , political science , law , macroeconomics
This paper shows that under constant returns to scale and free entry, customer discrimination unlike employer or employee discrimination, can cause long‐run wage differentials. The general equilibrium impact of affirmative action policies on wages, productivity and unemployment is contrasted under these types of discrimination. The empirical literature on affirmative action is surveyed in light of these models and some support is found for models of employer prejudice. Finally, by changing the composition of output, affirmative action policies raise the probability of a nondiscriminatory general equilibrium outcome under customer prejudice.