Discrimination in the labour market

Question 1

Discrimination in the labour market

Answer 1

Discrimination in the labour market occurs when employers make decisions on wages and employment based on prejudices, such as race, gender, religion, disability, social class, accent, age, height, schooling, sexual preference, weight.
It can lead to big variations in wages for the same job and different employment rates within a population.
Employer may perceive one group of potential employees is less productive than another - leading to a lower expected marginal revenue product, meaning a contraction in employment and lower wages for the discriminated group.

Question 2

Types of discrimination in the labour market

Answer 2

Gender discrimination
Racial discrimination
Age discrimination
Sexual orientation discrimination
Socioeconomic discrimination

Question 3

Gender discrimination

Answer 3

e.g. women may face lower wages, limited job opportunities, or barriers to advancement compared to men in the same roles.

Question 4

Racial discrimination

Answer 4

Treating individuals differently because of their race or ethnicity. It can manifest in hiring, promotions, pay and workplace treatment.

Question 5

Age discrimination

Answer 5

Often referred to as ageism, occurs when individuals are treated unfairly because of their age. This can affect both younger and older workers, leading to hiring biases or limited advancement opportunities.

Question 6

Sexual orientation discrimination

Answer 6

Discrimination based on an individual’s sexual orientation, such as being lesbian, gay, bisexual or transgender, can result in unequal treatment, harassment or job insecurity.

Question 7

Socioeconomic discrimination

Answer 7

Based on socioeconomic status/class - can manifest as unequal treatment/limited opportunities for individuals from lower-income backgrounds

Question 8

Causes of discrimination and labour market failure

Answer 8

Often the result of deep rooted information failures and prejudices

Question 9

Impacts of discrimination in the labour market

Answer 9

Causes resource misallocation
Causes an increase in inequality which has social costs(externalities of discrimination)
Leads to scarce Human Resources being under-utilized, slower trend growth rates
Lack of diversity in the workplace can hamper innovation and productivity

Question 10

Gender pay gap

Answer 10

The difference in average earnings/wages between men and women in the workforce.

Question 11

Factors that might explain the gender pay gap in the UK Labour market

Answer 11

1. Age and the glass ceiling effect: A substantial gender pay gap emerges among full time employees aged 40 and over. This links to many women taking a career break. Women may face systemic barriers, such as gender bias, stereotypes - both discriminatory practices - a good example of bounded rationality of employers.
2. Occupational clustering effects - In many jobs such as social care, accommodation and food services - pay is relatively low with limited trade Union representation - but there is a high concentration of females working in these occupations.

Question 12

Policies to tackle labour market discrimination

Answer 12

Anti-discrimination Laws and regulations: prohibit discrimination based on factors such as race, gender, age, disability, religion, sexual orientation and gender identity. An example in the UK is the Equal Pay Act.
Affirmative action/diversity initiatives by employers to increase the representation of underrepresented groups in the workforce.
Access to quality education and training: Invest in education and training programmes that address skill gaps and provide opportunities for individuals from marginalized groups to acquire the skills needed to access higher paying jobs.