Labor Market Discrimination

Two central and related questions in economics concern how resources are distributed and why some persons earn more than others. In the labor market, where the buyers are employers and the sellers are workers, exchange occurs when workers "sell" their labor to employers and receive wages or salary in return for the services that they perform. In the United States, economic status varies remarkably along race and gender lines. This paper describes racial differences in three distinct but related dimensions of economic status: earnings, employment status, and wealth. Finally, this paper reviews some explanations economists have offered for these differences and consider the evidence available to support or refute these explanations.