Why Discrimination Persists
Becker’s 1957 work on discrimination in labor markets generated an optimistic prediction. Firms that discriminate pay a cost because they forgo productive workers that non-discriminating competitors will hire instead. Over time, competitive pressure should therefore eliminate discrimination.
History has thoroughly falsified this prediction. Discrimination has not been competed away in any labor market where economists have looked carefully. The gap between Becker’s prediction and the observed reality reveals that rational economics misidentifies what discrimination is and how it works.
Economists distinguish taste-based discrimination, in which employers simply prefer not to hire members of certain groups regardless of productivity, from statistical discrimination, in which employers use group membership as a proxy for characteristics they cannot directly observe. An employer who uses race or gender as a proxy for something like reliability is drawing inferences from population-level patterns that are themselves often the product of prior discrimination, which creates a vicious circle.
The psychological research on implicit bias complicates the picture further. Studies using the Implicit Association Test and its successors show that most people, including those who explicitly reject prejudice, harbor automatic associations between social groups and evaluative attributes. These associations operate below the conscious level, and lead to well-intentioned people evaluating resumes differently depending on the apparent race or gender of the applicant.
Audit studies provide the cleanest evidence of this. Researchers send pairs of fictitious resumes to real job postings, holding everything constant except for names that signal racial identity. The results are consistent across many countries and many decades: in a country like Canada, resumes with names coded as white receive significantly more callbacks than identical resumes with names coded as Black.
But understanding why discrimination persists also requires recognizing that some workers benefit from it. Workers who belong to favored groups face less competition for jobs, promotions, and wages when members of excluded groups are kept out. This gives them an incentive to back political groups that will maintain discriminatory arrangements, even if they object adamantly to being accused of discrimination. Such groups merely need people to believe that not actively being bad is the same as being good.
India’s caste system and South Africa’s apartheid both persisted long after any plausible economic case for them had dissolved. They persisted because they served social and psychological functions that economic analysis does not capture: in particular, they guaranteed those near the bottom of otherwise low-status hierarchies that they were not at the very bottom.
If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.
– Lyndon B. Johnson
- Banaji2013
- Mahzarin R. Banaji and Anthony G. Greenwald: Blindspot: Hidden Biases of Good People. Delacorte, 2013, 978-0553804645.
- Becker1971
- Gary S. Becker: The Economics of Discrimination (2nd ed.). University of Chicago Press, 1971, 978-0226041162.
- Cassidy2025
- John Cassidy: Capitalism and Its Critics: A History: From the Industrial Revolution to AI. Farrar, Straus and Giroux, 2025, 978-0374601089.
- McGhee2021
- Heather McGhee: The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together. One World, 2021, 978-0525509561.
- Wilkinson2011
- Richard Wilkinson and Kate Pickett: The Spirit Level: Why Greater Equality Makes Societies Stronger. Bloomsbury Press, 2011, 978-1608193417.