Gary Becker's model, I think, is only part of the story. I am quoting from Gavin Wright's Sharing the Prize (p. 76-77), which is about the Civil Rights movement:
"segregation in such facilities as lunch counters, restaurants, and hotels was rarely required by law, and when statutes or municipal ordinances did exist, enforcement was generally at the discretion of proprietors... Businessmen feared that serving blacks, particularly in socially sensitive activities such as eating and sleeping, would result in the loss of white customers."
In the conclusion of the chapter, Wright says the following:
"The interpretation advanced in this chapter is that southern businessmen were locked into a low-level equilibrium, the stability of which was bolstered by the fact that they did not see it that way themselves. Both as firms and as downtown collectivities, businesses balanced the loss of black consumer spending against anticipated losses of white patronage."
Now, regarding present-day labour market outcomes, there is possibly a similar mechanism operating.
Regarding your question on a social mechanism, I am currently in the process of developing a model, and then subjecting it to empirical tests. I hope to have that done very soon!
Friday, 17 April 2015
Is history is more or less bunk? 3
I ended the post Is history is more or less bunk? 2 with two questions to do with why Gary Becker's argument that competitive labour markets would force employers to keep their prejudices out of their business decisions does not work in this case and what social mechanisms could be at work to perpetuate the discrimination we see in the labour markets. I emailed these questions to the author of the paper, Cornelius Christian, and he has kindly given his permission for me to reproduce his answers below: