A General Equilibrium Model of Discrimination and Its Effects on Incomes

Zafiris Tzannatos

Scottish Journal of Political Economy, 1987, vol. 34, issue 1, 19-36

Abstract: A general-equilibrium model is utilized to examine the effects upon factor incomes of the narrowing of an arbitrary wage differential between two groups of workers. The empirical section draws upon the recent experience of female workers in Britain after the introduction of the Equal Pay Act. The results suggest that profits are more likely to decrease when arbitrary wage differentials narrow, and this conclusion casts doubt whether many of the neoclassical theories of discrimination are relevant to the empirical study of discrimination. Copyright 1987 by Scottish Economic Society.

Date: 1987
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Scottish Journal of Political Economy is currently edited by Tim Barmby, Andrew Hughes-Hallett and Campbell Leith

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