Define discrimination. Why does discrimination occur and what evidence exists that it does occur?

Answer 1

Economic discrimination occurs when equivalent factors of production receive different payments for equal contributions to output. This is hard to apply in practice because it is not always possible to tell when two factors of production are "equivalent." A difference in income between two factors is generally not sufficient evidence to conclude that discrimination occurs.

Discrimination may occur because of prejudice. This may be on the part of an employer or on the part of fellow workers. There may also be statistical discrimination. Statistical discrimination is said to occur when the productivity of a particular worker is estimated to be low just because that worker belongs to a particular group. It is not necessarily caused by prejudice, but it can still be a source of inefficiency. Convincing evidence of discrimination is often difficult to obtain, and court cases that allege discrimination are difficult to resolve.