employment, Wm and L* in the figure. A union wants to increase wages, but at the cost of lower employment,

Wu and L* in the figure. Since both sides want to reduce employment, we can be sure that the outcome will be

lower employment compared to a competitive labor market. What happens to the wage, though, is based on

the monopsonist’s relative bargaining power compared to the bargaining power of the union. The actual

outcome is indeterminate in the graph, but it will be closer to Wu if the union has more power and closer to

Wm if the monopsonist has more power.

14.5 Employment Discrimination

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Analyze earnings gaps based on race and gender

• Explain the impact of discrimination in a competitive market

•

Identify U.S. public policies designed to reduce discrimination

Barriers to equitable participation in the labor market drive down economic growth. When certain populations
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