ECON 133 "Global Inequality and Growth" Mandatory Reading # 4 Race Discrimination: An Economic Perspective Due April 2nd 1. According to the authors, what are the two main models of discriminatory behavior economists rely on? Briefly describe and provide an example of each of them. 2. The reading mentions how, using Becker's theory of taste-based discrimination, labor market frictions between prejudiced and less prejudiced firms can have an important impact in reducing the wage gap between black and white workers. Explain how the wage gap is reduced under Becker's model. 3. During lecture we talked about the divergence of the income and labor force participa- tion gap between white and black workers. Considering the information provided in the figure below and using a statistical discrimination perspective, how do you think mass incarceration (institutionalization) has played a role in the decrease in both employment and participation in the labor force of black men? Unemployed Out of labor force Institutionalized (mostly people in prison) 40% 40% White men not working Black men not working 30 30 20 20 10 10 0 0 1950 1970 1990 2007 2014 1950 1970 1990 2007 2014 Source: Patrick Bayer and Kerwin Kofi Charles, "Divergent Paths." Note: Men aged 25-54. | The New York Times - 9 - 4. The authors emphasize the importance in thinking of the dynamics of discrimination as a system. Describe why they argue discrimination works as a system, the limitations this creates for targeted antidiscrimination policy, and the proposed alternatives