Racial wage discrimination can proliferate in labour markets with large frictions because workers facing discrimination find it difficult to relocate. This column presents evidence of the interaction between frictions and discrimination in the English Premier League, the top tier of English football, using the 1995 Bosman ruling as an exogenous shifter. Before the ruling, wage discrimination resulted in teams with more black players outperforming competitors with equivalent payrolls. The decrease in frictions associated with the ruling allows players to escape discrimination by relocating.Pretty much what Gary Becker said in his famous paper (and which these two guys, Pierre Deschamps and José de Sousa, cite). When something is costly less is demanded;
Our results could be important for public policy. If we consider restrictive contracts to be an important component of the typically nebulous ‘labour market frictions’, increasing labour mobility and reducing frictions could lower discrimination. A heartening interpretation of our results is that the proper labour market conditions can cause wage differentials between white and black employees to disappear even if racist attitudes remain.Just add minimum wage, union wage, and occupational licensure laws, mix and pour.