[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

If there are enough firms that put profits above prejudice, then the wages of women
will be bid up toward the level of men of comparable productivity.
Beginning in the 1960s, the government has taken an active stance in combating
discrimination. In 1964, Congress passed the Civil Rights Act, which banned employment
discrimination and set up the Equal Employment Opportunity Commission
to prosecute cases of discrimination. The reach of these laws was extended in 1975
when the government prohibited age discrimination; in 1990, job discrimination
against qualified individuals with disabilities was barred.
Beyond this, the federal government has required its contractors to undertake
affirmative action. They must actively seek out minorities and women for jobs,
and actively seek to promote them to better-paying positions. Affirmative action
has occasionally taken the form of quotas that specify that a certain number or fraction
of positions be reserved for minorities or women. Critics claim that quotas are
discriminatory—they imply that a minority individual would be chosen over a more
qualified white male. One of the objectives of antidiscrimination laws was to discourage
thinking in racial or gender terms. Courts have reaffirmed this aim, allowing
quotas only in special circumstances such as redressing the effects of specific
instances of past discrimination.
Wrap-Up
EXPLANATIONS OF WAGE DIFFERENTIALS
Unions: Unions may succeed in obtaining higher wages for their workers.
Compensating differentials: Wage differences may correspond to differences
in the nature of the job.
Productivity differentials: Wage differences may correspond to differences
in the productivity between workers.
Information-based differentials: Wage differences may be a reflection of
workers’ not having perfect information about the opportunities available in
the market, and employers’ not viewing all workers as perfect substitutes for
one another.
Imperfect labor mobility: Differentials are preserved because of the
reluctance of individuals to move between jobs.
Discrimination: Wage differentials and hiring and promotion decisions can
sometimes be traced to nothing more than differences of race or sex.
Motivating Workers
The discussion to this point has treated workers as if they were machines. Workers
have a price—the wage—analogous to the price of machines. But even to the most
profit-hungry and coldhearted employer, people are different from machines. They
bring adaptability and a multitude of skills and experiences to a job. Most machines
can do only one task, and even robots can only follow their programs. However,
364 ∂ CHAPTER 16 IMPERFECTIONS IN THE LABOR MARKET