Question

Please explain the difference between split labor market, Marxist, and Gary Becker's economic theory of discrimination. Thank you!

Answer 1

Edna Bonacich introduced the concept of Split market in the early 1970s. It’s a concept that explains the segregation of labor market according to race and ethnicity in order prevent the prevailing tension in the labor market where individual prejudice do not have any importance. As the labors moved from country to country, they had to work together and people normally identify themselves with their race, ethnicity, language etc. If one person is affected, other join hands because they all identify themselves as one race, one ethnic group thus ending up with a conflict with the other race which was otherwise two individual’s issue.

Karl Marx in his historical materialism explains how the upper class people control the production and profit thus maintaining the social classes where the working class always struggle. The ruling class that controls the production also control and exploit the lower class labor and earn surplus profits leaving the labors without much resources. Marx proposes another theory where he suggests that each one should be awarded according to the contribution one makes thus introducing the communist view instead.

Gary Becker’s economic theory of discrimination suggests that people are discriminated based on their race, color etc. at work place which was believed to be a part of sociology. He suggests that if an employer discriminates and do not employ minorities, the employer has to pay more to keep up with his production but if an employer employs more minorities, they could give less wages, employ more people and thus increase productivity. He says that in the presence of a taste for discrimination, the minority group is the one which would be always affected. Although his theory was not accepted as an economic theory, it still gained widespread acknowledgement later.   

Becker was one of the first economists to branch into what were traditionally considered topics that belonged to sociology, including racial discrimination, crime, family organization, and drug addiction(see rational addiction). He was known for arguing that many different types of human behavior can be seen as rational and utility maximizing. His approach included altruistic behavior of human behavior by defining individuals' utility appropriately. He was also among the foremost exponents of the study of human capital. Becker was also credited with the "rotten kid theorem."