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Economics Assignment

Discrimination as the word suggests is an act which is unjust and biased treatment given to the people of various castes, creed, gender and race (Martin & Bassanini, 2018). In today’s modern world it is prevalent in various forms where people are looked down upon by others on the basis of their gender, skin colour, race, caste and various other factors. A recent example is of the death of George Floyd who was killed on the basis of racism. After his death, in the United States a series of revolts are taking place just to question his death. Likewise, labour market discrimination it is somewhat similar to discrimination. Labour market discrimination happens when the employer’s decision on the wages and salaries of its employees and workers is based on the characteristics of prejudices (Martin & Bassanini, 2018). For instance it may be on the basis of race, caste, religion, creed etc. This discrimination in the labour market is one of the root causes of inequality in the modern society where the rich is becoming richer and poor is becoming poorer. It also leads to decrease in the productivity of such workers as the wages they are being paid are less which results in lack of incentive and motivation in these workers (Jhinghan, 2016). Thus, the main aim of this assignment is to probe into labour market discrimination in the society and how it can be resolved.

Discrimination in the labour market is also clearly seen in the gender differences of the salaries paid to men and women by their employers (Whitehouse, 2001). It has been seen over the years that there exists a ‘gender pay gap’ among various nations. In the year 2011, Schober, Thomas and Rudolf in their study revealed the influence of the gender pay gap on the growth in the economy in the 16 countries which were export based and semi industrialised in functioning (Schober et al., 2011). The results of the study showed that rise in the gender pay gap resulted in the negative growth rate in the economies under study. In these nations the women are not given equal amounts of remuneration which they rightfully deserve in comparison to men who are paid more irrespective of their less productivity in comparison to women.

This type of labour discrimination is evident on the basis of the responsibilities of the family on the two, occupational and work division of the basis of sex and also by vertical segregation within different works. An example to this is seen in England where the ‘nurturing’ qualities and capabilities have a wage cut (Whitehouse, 2001). This shows that the work associated with the women is not given its due credit as it is regarded as women’s domain of work. Gender labour discrimination is also evident in the fact that some jobs are specific to only men and women are not even given a chance to perform that work or to showcase their talents and capabilities. The employers also have ‘statistical discrimination’ on the basis that the women will be less productive in giving better output results in the production, they would be likely to quit the jobs more in comparison to men, they will have lower dedication and determination levels in comparison to men.

In addition to this, studies in the long run show that the effects of gender discrimination on the growth of social institutions the results were a negative growth. This was revealed by Kolev and Ferrant (2016) in their study. They found out that gender discrimination in labour market had a negative impact on the national income of the nations. This effect was seen much prevalent and stronger in underdeveloped economies and in economies where they had low income. They calculated that due to gender discrimination in the labour market the income lost due to it was around 12 trillion US dollars which constituted around 16% of the entire world income around that time which was a huge loss to the economies. Kolev and Ferrant (2016) even discussed that if this type of gender discrimination was decreased in the economies it will have a positive impact on the economic growth of social institutions by an approximate percent of 0.03-0.6 by the year 2030 in the near future.

Now, some statistical figures to support labour market discrimination in Europe, Denmark the studies could see large levels of differences in the employment levels of people who are foreign born than who are natives of the country. In Denmark, around 6% of the natives of Denmark were unemployed in contrast to 25% people who were belonging to foreign countries in the year 2003. Similarly in the year 2007, there was a comparison made in 16 European Union states where unemployment rates of the foreign nationals residing in European Union was higher in comparison to the people residing there as residents of the land (Kraal et al, 2009). Similar results can also be seen in Belgium, the unemployment rates of Belgium nationals which was estimated as 10% were comparatively lesser in contrast to Moroccan and Turkish nationals with a percentage of 56% in females and 45% that in males.

Moreover, this problem of labour market discrimination on a macroeconomic level reveals that it leads to a sharp reduction in the unemployment rates of people. When there is unemployment in the economy it leads to loss in demand as people due to no employment have no purchasing power which will lead to decrease in the demand for goods and services (Jhinghan, 2016). When demand gets reduced simultaneously the supply and production of the goods and services get affected as with decreased demand the producers have to bear losses and the supplier’s loose incentive and motivation to increase their supply further. This as a result leads to a reduction in the GDP and economic growth in the economy (Misni, 2017). Moreover, Sanchez-Losada and Garcia-Minguez (2003) in their theoretical study and analysis also revealed the effects of discrimination in the labour markets were severe and negative on the economic growth and prosperity of the developing economies in the world. Furthermore, in a study conducted by Asali in 2018 in Georgia also revealed that labour market discrimination was also prevalent among ethnic groups. It showed that approximately 113% of ethnic gap in employment was present but on the contrary no evidence was there to prove it. (Asali et al., 2018)

So there are also certain policies in the world which try to curb the labour market discrimination in the economies. These policies aim at decreasing the discrimination levels in the employment so that it could benefit the workers and employees who got affected as a result of prejudice in their employment. Since with these policies the workers were getting directly benefitted it leads to a consequent rise in the economic standard of the workers improving their quality of life. With getting paid proper wages and salaries in accordance with their productivity it leads to a rise in their respective purchasing power. With an increase in the purchasing power, the demand subsequently surged for the goods and services. This thereby increased the production of goods and services as well leading to an increase in supply. All these changes followed a rise in the economic growth and prosperity in the economy.

Now, The Age Discrimination in Employment Act (ADEA) of 1967 in the USA helped the employees get protected and insured against discrimination by their employers based on age. This act was implemented and strictly enforced by Civil Rights Centre. This was focused on people who were generally falling in the age group of 40-65 years. It protects the people aged 40 and above from getting discriminated on the grounds of age in their getting employed, compensation, promotion, getting discharged of duties etc (Neumark, 2008). On the other hand, in the European Union, law against age discrimination is followed by Framework’s Directive 2000/78. In this act it gives legal right to the employees to protect them against any kind of labor market discrimination on the basis of sex, caste, race, creed etc. Prior to this legislation the member countries of the European Union did not have legislation protecting employees against any discrimination. This got changed by Framework’s Directive getting into effect (Riesenhuber, 2009).

Following the Framework’s Directive, General Protection law was established in Italy in the year 1970. But it got more power when it got amended in 2003. It was established in line to protect the labourers from market discriminatory practices. In addition to this, Romania and Poland implemented labour laws against discrimination in the years 1991 and 1996 respectively in accordance with Framework’s Directive (Lahey, 2010).. Finland also amended its penal code- Penal code Chapter 47 in the year 1995 and the country passed a Non Discrimination Act in the year 2004 so that the discrimination in respect of age was made a legal offence. Employment Equality Act was passed in Ireland in the year 1998 which was later on amended in 2004 to give equal rights to all the labourers (Lahey, 2010).

In the country of Singapore, a similar act was established against discrimination on the labourers on the basis of age. Retirement Age Act in the 1993 was passed in the country in an attempt to tackle the problem faced by employees aged above 55 years in their work space such as of getting low wages, lower promotion grades etc (Debrah, 2006). In United Kingdom, Equality Act in the year 2010 which was a legislation against discrimination to protect the rights of the workers in case of biasedness towards them. (Wahab, 2018)

In the country of New Zealand to prohibit discrimination on labour on the basis of age Human Rights Act 1993 and Employment Relations Act 2000 have been formed to safeguards the interests of labour in the market discriminatory practices (Harcourt et al., 2010). Employment Relations Act 2000 covers those workers who are employed. In the Human Rights Act 1993, section 23 and 22 of the act covers hiring and recruitment of employees and those workers who are employed in the voluntary sector.

In India, to curb the anti-discriminatory policies against workers National Rural Employment Guarantee Scheme (NREGS) was made in the year 2006 with an aim of providing a uniform wage to all the workers irrespective of their gender and to give focus on employment of females. In addition to this, Minimum Wage Act 1948 was formed with a purpose to provide a fixed level of minimum wage rate for the labourers (Amit, 2013).

In addition to this, in the US Pregnancy Discrimination Act 1948 was formed with an aim at prohibiting any kind of discrimination or biasedness against women in the offices who wanted to or planned to have a baby or who were returning to work after pregnancy. These laws against labour discrimination have declined the gender wage gap. Furthermore, the companies should make sure to have a proper provision of providing paid maternity and paternity leaves to their employees so that they could take proper care of their new born.

Furthermore, the governments of various countries also tried to stabilise the working hours of employees so that they could maintain a personal and work life balance. In countries such as Luxembourg, France, Spain the workers have a Right to disconnect (Secunda, 2018). This right aims at maintaining the personal and work life balance for the workers so that they can disconnect with their companies after office hours so that they can focus on their personal lives. It is given to the employees so that they are not discriminated on the basis of extra working hours.

So, as it is clear, from the above-detailed discussion and explanation of how the labor discrimination practices are not only hampering and damaging the interests of the labor and working-class people. In the overall aspect it is slowing down the growth of the economy’s growth and prosperity as a vicious cycle of weak employments result in low economic growth and development. So to eradicate such problems of labor market discrimination various countries of the world have laid to down rules and regulations so as to safeguard the interest of the workers in the economy. This is helping not only the labour class but also in raising the growth rate of their economies.

References for Labour Market Discrimination

Amit, K. (2013). Effective public policy which can reduce gender discrimination in the agricultural labour market: A theoretical investigation. The Asian Economic Review, 55, 449-492.

Asali, M., Abu-Qarn, A. & Beenstock, M. (2018). The cycle of violence in the second intifada: Causality in nonlinear vector autoregressive models. Journal of Applied Econometrics, 32(6), 1197-1205.

Cain, G.G. (2005). The economic analysis of labor market discrimination: A survey. Handbook of Labor Economics, 1, 693-795. https://doi.org/10.1016/S1573-4463(86)01016-7

Debrah, Y.A. (2006). Tackling age discrimination in employment in Singapore. The International Journal of Human Resource Management ,7(4). https://doi.org/10.1080/09585199600000157.

Ferrant, G., & Kolev, A. (2016). Does gender discrimination in social institutions matter for long-term growth? Cross-country evidence. OECD Development Centre Working Paper, 330. https://doi.org/10.1787/18151949

Garcia-Minguez, P., & Sanchez-Losada, F. (2003). Statistical discrimination and growth: Should we subsidize discriminated against workers. Economics Letters, 79(2), 255- 261.

Harcourt, Mark, Wilkinson, Adrain, Wood & Geoffrey. (2010). The effects of anti-age discrimination legislation: A comparative analysis. The International Journal of Labour Law and Industrial Relations, 36(1).

Jhinghan, M.L. (2016). Micro economic theory. Vrinda Publications.

Kraal, K., Rossblad, J. & Wrench, J. (2009). Equal opportunities and ethnic inequality in European labour markets. Amsterdam University Press.

Lahey, J.N. (2010). International comparison of age discriminating laws. US National Library of Medicine, 32(6), 679-697. https://dx.doi.org/10.1177%2F0164027510379348

Misni, S. (2017). The effect of economic growth in relation to unemployment. Journal of Economics and Economic Education Research, 18(2),1-10.

Neumark, D. (2008). The age discrimination in employment act and the challenge of population aging. National Bureau of Economic Research, 31(1), 41-68. https://doi.org/10.1177%2F0164027508324640

Riesenhuber, K. (2009). Age discrimination law in Europe. Kluwer Law International.

Schober, Thomas & Rudolf, W. (2011). Gender wage inequality and economic growth: Is there really a puzzle? World Development, 39(8), 1476-1484.

Schunda, P.M. (2018). The employee right to disconnect. 9 Notre Dame Journal of International and Comparative Law, 18(2). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3116158

Wahab, H.A. (2018). The legal context of employment discrimination in Malaysia. International Journal for Studies on Children, Women, Elderly and Disabled. 4, 119-124.

Whitehouse, G. (2001). Sex differences in pay. International Encyclopedia of the Social and Behavioural Sciences. 1, 13941-13946. https://doi.org/10.1016/B0-08-043076-7/03992-9

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Economics Assignment Help

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