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Profit Maximizing Firms: Discriminatory wage differentials

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Why is it hard to establish whether a group of workers is being discriminated against? Explain how profit-maximizing firms tend to eliminate discriminatory wage differentials. How might a discriminatory wage differential persist?

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As per my understanding your reference/text book is Principles of Microeconomics by N. Gregory Mankiw. It is a very good book.

In general, it is hard to establish whether a group of workers are being discriminated against because there are ...

Solution Summary

Solution clearly explains why profit maximizing firms tend to eliminate discriminatory wage differentials and why discriminatory wage differential persist.

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