the investment, because the educational degrees would not pay off. While the government has legally abolished

discriminatory labor practices, structures and systems take a very long time to eradicate.

Competitive Markets and Discrimination

Gary Becker (1930–2014), who won the Nobel Prize in economics in 1992, was one of the first to analyze

discrimination in economic terms. Becker pointed out that while competitive markets can allow some

employers to practice discrimination, it can also provide profit-seeking firms with incentives not to

discriminate. Given these incentives, Becker explored the question of why discrimination persists.

If a business is located in an area with a large minority population and refuses to sell to minorities, it will cut

into its own profits. If some businesses run by bigoted employers refuse to pay women and/or minorities a
348 14 • Labor Markets and Income
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