Competition and Wage Discrimination: The Effects of Interindustry Concentration and Import Penetration^*

Abstract

Objective. Economic theory suggests that competition reduces employers' latitude to engage in wage discrimination ( Becker, 1957 ). This study investigates the impact of foreign and domestic competition on wage discrimination. Method. Utilizing the sample of males in U.S. manufacturing industries from the 1990 Public Use Micro Sample (PUMS), industry wage equations are estimated. In a second stage, the impact of domestic and foreign competition on racial wage disparity is assessed. Results. We find little evidence to support our hypothesis. Conclusions. Notwithstanding, the failure of conventional economic theory to satisfactorily explain racial wage disparity reiterates the need to incorporate alternative theories of discrimination into mainstream economic theory.