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Discrimination in Employment

Stanford Law School, John M. Olin Program in Law and Economics, Working Paper No. 161

37 Pages Posted: 4 Oct 1999  

John J. Donohue III

Stanford Law School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 1998


This paper examines the development of the law and economics approaches to discrimination in employment. The early work of Gary Becker was used to argue against the need for antidiscrimination laws since the market would tend to discipline any firm that failed to maximize profits by harboring animus against certain types of employees. The tension between a theory that, in Kenneth Arrow's phrase, predicted the absence of the phenomenon that it purported to explain and the fact that discrimination thrived in the American South for long periods of time has led to two responses: some have argued that the Becker model was inapplicable since the Southern labor market was not competitive (the approach of Richard Epstein), and others have argued that the Becker model is simply wrong in that whites benefitted from racial discrimination, which therefore enabled the practice to persist (the work of Richard McAdams).

The paper discusses the efficacy of various antidiscrimination initiatives, the explosive growth of the antidiscrimination caseload and its change in composition from hiring to discharge cases, and the proliferation of employment discrimination laws that prohibit not only the core areas of race and sex discrimination, but also discrimination on the basis of age, disability, and other grounds.

Suggested Citation

Donohue, John J., Discrimination in Employment (June 1998). Stanford Law School, John M. Olin Program in Law and Economics, Working Paper No. 161. Available at SSRN: or

John J. Donohue III (Contact Author)

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