From Physical to Human Capital Accumulation: Inequality and the Process of Development
Author(s)
Galor, Oded; Moav, Omer
Abstract
This paper develops a competitive model of racial wage and employment discrimination. Discrimination is a persistent outcome of the interaction of two phenomena. The first is the adverse effect of racial conflict on the organizational strength of workers, which, in turn, affects the formation of wage differentials. This is a class struggle effect. The second is the negative correlation between the interracial employment ratio and the wage differential, within occupations and across all capitals. This is a racial exclusion effect. The interaction of the class struggle and racial exclusion effect implies persistent discrimination.
