Discrimination as a Convention: A Re-Assessment of the Impact of Social Intervention

Abstract

This article argues that the “standard approach” of the analysis of discrimination cannot easily explain the durability of discriminatory practices, which should “normally” disappear thanks to market forces. We propose an analysis of labor market discrimination using the concept of convention. First, our convention-based explanation tries to characterize discrimination as an arbitrary, automatic, conformist, and self-enforcing behavior. Second, using the French institutional approach of economics of convention, we can define discrimination as an illegitimate practice. This implies that, because discrimination is stable in the long run and unfair, legislation and policy, as well as affirmative action, are useful. This new approach to the economic analysis of discrimination also changes the interrelation(s) of markets, firms, and law.