The Law and Economics of Critical Race Theory

72 Pages Posted: 12 Dec 2011

See all articles by Devon W. Carbado

Devon W. Carbado

University of California, Los Angeles (UCLA) - School of Law

Mitu Gulati

University of Virginia School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: 2003


Legal academics often perceive law and economics (L&E) and critical race theory (CRT) as oppositional discourses. Using a recently published collection of essays on CRT as a starting point, we argue that the understanding of workplace discrimination can be furthered through a collaboration between L&E and CRT. L&E's strength is in its attention to incentives and norms, specifically its concern with explicating how norms incentivize behavior. Its limitation is that it treats race as exogenous and static. Thus, the literature fails to consider how institutional norms affect, and are affected by, race. To put the point another way, L&E does not discuss how norms incentivize racial behavior, obscuring that how people present their race (or themselves as racial subjects) is a function of norms.

The strength of CRT is its conception of race as a social construction. Under this view, race is neither biologically determined nor fixed. Instead, race is ever evolving as a function of social, political, legal, and economic pressures. A limitation of CRT is that much of its analysis of race as a social construction is macro-oriented. Thus, CRT has paid insufficient attention to the social construction of race within specific institutional settings, like the workplace. Further, CRT has virtually ignored the agency people of color exercise to shape how their racial identity is interpreted - that is say, constructed. Explicitly incorporating L&E's focus on incentives and norms into CRT provides CRT with a means by which to articulate the notion of race as a social construction at the level of individual "choice." The basic idea is that people of color construct (present racial impressions of) themselves in response to norms. Norms, in this sense, are racially productive, and individuals are part of the production apparatus.

Having set out the basic elements of the collaborative enterprise, we deploy this collaboration to respond to a specific and important question about the workplace: How are modern employers and employees likely to "manage" workplace racial diversity? We raise this question because we assume that, for institutional legitimacy reasons, most workplaces will strive to achieve at least a modicum of racial diversity. The question, again, is: How will this diversity be managed? Part of the answer has to do with assimilation, an ideological technology for constructing race and a central theme in CRT; and part of the answer has to do with efficiency, an ideological technology for creating incentives and a central theme in L&E. Both ideas - assimilation and efficiency - combine to tell a story about workplace discrimination that derives from what we call "the homogeneity incentive." In sum, in order to increase efficiency, employers have incentives to screen prospective employees for homogeneity, and, in order to counter racial stereotypes, nonwhite employees have incentives to demonstrate a willingness and capacity to assimilate. In this sense, the modern workplace discrimination problem may be more about employers requiring people of color to demonstrate racial palatability than about employers totally excluding people of color for the workplace. We discuss whether and to what extent anti-discrimination law can ameliorate this problem.

Suggested Citation

Carbado, Devon W. and Gulati, Mitu, The Law and Economics of Critical Race Theory (2003). Yale Law Journal, Vol. 112, No. 1757, 2003, Economic Research Initiatives at Duke (ERID) Working Paper, Available at SSRN:

Devon W. Carbado (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-825-3365 (Phone)
310-825-6023 (Fax)

Mitu Gulati

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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