Unlike other models of labor market discrimination. Non-competitive discrimination is based on the assumption of the firm’s behavior in the labor market where it assumed that the firms are the wage takers. Thus. The model explains that the extent to which the firm enjoys influence over the wages they are obligated to pay to their employees. The two possible sources of collusion as per this model are. Collusion and through some sources of monopolistic power. The non-completive model of discrimination have three sub-models, which are duly explained hereunder:
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As per this model. every employee. whether a men or women. is involved in some sort of
Occupational groups and only because of existence of such groups. firm experiences market segmentation. As a result of formation of market segmentation in the firm. many researchers had argued that this whole process is the result of deliberate crowding policy practiced so as to lower the wages in certain occupations.(Ehrenberg et all . 2012) The graphical impression of occupation crowding model is explained hereunder:
The above diagram directs us to a conclusion that in the un-concentrated market. The supply of labor force is low. In other words. Because of low supply in the un-concentrated markets equilibrium wages will be higher (Wh). While in concentrated markets. Where the amount of labor supply is higher in comparison to un-concentrated markets. The equilibrium wages (Wl) will be low. However. Although our diagram has assisted us to figure out the crowding effect. But in reality this phenomena is not comprehended easily.
Thus, this theory asserts that even though both the men and women in the same occupation let’s say, agriculture, are equally productive. In such a case, the firms are required to replace any expensive labor force with cheaper labor workforce. For Instance, if men are demanding higher wages, they should be replaced with relatively low wage earning female workforce and thus. This will help in reducing or narrowing the wage gap between both of the genders. But, a discriminative based model explains that the since female workforce is crowded into a relatively small number of occupations. This inevitably reduces the wages of female workforce and results into gender wage gap. (Barjos. 2010)
Dual labor market model occurs as a typical variant of the crowding hypothesis. Well known researcher like Reich. Gordan and Richard. Defines the labor market segmentation as. ‘’the historical process whereby political-economic forces encourage the division of the labor market into the separate sub-markets or segments. Distinguished by the different labor characteristics and behavior rules’’. (Reich et all. 1973)
The model of dual market was first developed by Doeringer and Piore (1971) in which they described the labor market into two divisions. First the labor force employed in the primary sector and second. The labor force employed in the secondary non-competing sectors. As per this theory, jobs in the primary sector generally have high payments and work status. Better job security. Promotion opportunities depends on internal fair process of the firm. Thus overall the labor force involved in the primary sector involves better working environment. On the other hand. Jobs of the labor force employed in the secondary sector is of low wages. Poor working environment. Low job security. No or little chances of promotion or training. Such kind of low profile jobs are filled primarily by women. Ethnic minorities and people from disadvantaged groups. Furthermore. labor force employed in the secondary sector could not consider shifting from secondary sector to the primary sector as the labor force employed in the secondary sector are always considered to be low productive and inferior by the employers and are always offered with the lower rate of wages than the primary sector.
Thus, although the dual market model is an old model and also does not really explain as why non-competing arose. However. This models provides some strong evidence of the dual market hypothesis which proves that the gender wage gap and discrimination exists among male and female workforce.
In terms of labor force, Monposonic market will exist only if a firm is the only buyer of the labor force. Unlike the previous two models discussed by us where the researchers have presented their respective models based on unclear assumptions that workers are “assigned” to occupational groups. A monopsony model of restricted mobility is built around the presence of job search costs for employees. Below is the graphical illustration of the two groups with the same productivity:
In the above diagram with panel ‘a’ and panel ‘b’. The supply curves and the marginal revenue product of the labor curves for both males and females are depicted. Panel ‘a’ describes that the employer has hired Em male workers and has provided them with ‘Wm’ wages and there is also a gap between MRP*l and Wm. However. It was shocking to witness that even if the same employer will hire female workforce. The gap between MRP*l and Wm is significantly large. To explain this situation. We will explain two types of monoposonist discrimination:
According to the perfectly discrimination. The monoposonist hires different workers and with different wages. But on the other hand. To maximize firm’s profit a perfectly discriminating monopsonist “perfectly discriminates” by paying each worker his or her reservation wage.
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However. Non-discriminating monopsonist regardless of each workers’ reservation wage. Have to distribute the same wage among all its workers. Furthermore. There is another feature that in case of non-discrimination monopsonist may/must increase wages to attract workers. And employs fewer workers than would be employed if the market were competitive.
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