Does Equal Pay Legislation Reduce Labour Market Inequality?

Leo Kaas ()

No 2421, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper considers a labour market model of monopsonistic competition with taste-based discrimination against minority workers to study the effect of equal pay legislation on labour market inequality. When the taste for discrimination is small or competition is weak, the policy removes job segregation and the wage gap completely. However, with a bigger taste for discrimination or stronger competition, equal pay legislation leads to more job segregation, and sometimes minority workers end up earning less than before. Profits of discriminating firms may increase, and discrimination can persist in the long run although it would have disappeared without the policy.

Keywords: discrimination; monopsonistic competition; equal pay legislation (search for similar items in EconPapers)
JEL-codes: D43 J71 J78 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2006-11
View list of references

Downloads: (external link)
ftp://repec.iza.org/RePEc/Discussionpaper/dp2421.pdf (application/pdf)

Related works:
Journal Article: Does Equal Pay Legislation Reduce Labour Market Inequality? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:iza:izadps:dp2421

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute for the Study of Labor (IZA)
Address: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Contact information at EDIRC.
Series data maintained by Mark Fallak ().