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Suppose that employers in the United States have discriminatory preferences against Mexican immigrants. All else equal, as the number of discriminatory firms decrease over time,

Suppose that employers in the United States have discriminatory preferences against Mexican immigrants. All else equal, as the number of discriminatory firms decrease over time, the theory of preference-based discrimination would predict that:

  1. The relative wages of Mexican immigrants would increase.
  2. The relative wages of Mexican immigrants would decrease.
  3. The relative wages of Mexican immigrants would stay the same.
  4. The change in the relative wage of Mexican immigrants would depend on whether Mexican immigrants are gross complements or gross substitutes with other workers

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