Suppose that tall employees dislike working with short employees.Assume also that short and tall employees are perfect substitutes for one another in producing goods.What is the likely outcome?

Question

Quizplus · Accepted Answer

When perfect substitutes are available, firms are likely to segregate the workplace by employee characteristics rather than pay a premium to one group over the other. In this case, tall employees who dislike working with short employees would prefer to work in a workplace consisting solely of tall employees. Similarly, short employees who are disliked by tall employees would prefer to work in a workplace consisting solely of short employees. Therefore, it is likely that workplaces will be segregated based on height.

Suppose That Tall Employees Dislike Working with Short Employees