The competitive labor market model suggests that the persistence of significant employer discrimination requires the owners of the firm to

Question

Quizplus · Accepted Answer

The competitive labor market model assumes that employers will maximize profits by paying the market-clearing wage rate, which is where the supply of labor equals the demand for labor. Therefore, significant employer discrimination would only persist if the owners of the firm were willing to supply capital at a rate of return below what could be earned elsewhere, as a result of their discriminatory hiring practices. If they were to pay the market-clearing wage rate, they would not discriminate against certain groups and would hire the most qualified candidates, which would maximize their profits.

The Competitive Labor Market Model Suggests That the Persistence of Significant