Minimum Wage and Pure Discrimination: A Note

Robert Cherry
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Robert Cherry: CUNY

Eastern Economic Journal, 1989, vol. 15, issue 1, 55-62

Abstract: When two groups of workers are imperfect substitutes, a minimum wage increase does not necessarily increase discriminatory hirings. A Becker model with imperfect substitutes demonstrates that discrimination is determined by the rate of change of substitutability between the two groups. Only if the rate of change declines when additional workers are employed would a minimum wage increase intensify discriminations. This model also presents the equilibrium conditions that determine the number of less qualified workers from the preferred group hired when total employment is fixed.

Date: 1989
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