Policy Matters: Discrimination in the labour market and what policymakers can do about it

In this episode of Policy Matters, hosts Franz Buscha and Matt Dickson discuss a non-COVID-19 policy topic that has been prominent in recent months following the recent Black Lives Matter protests: the ethnic inequalities that exist in socio-economic outcomes in the UK. Examining the issue from an academic viewpoint, Franz initially explains how labour economists define discrimination and how theoretically classical economics would expect labour market discrimination on the basis of race or gender to be eliminated by market forces. Matt and Franz go on to discuss how reality clashes with this theory, setting out the extent of contemporary ethnic and gender pay inequalities and some of the issues with analysis that seeks to explain away the large differences in pay between men and women and between white workers and those of other ethnicities. The discussion continues by looking at studies directly highlighting discrimination in hiring in both the UK and the US before concluding with thoughts on what policymakers could do to address these longstanding inequalities.