A population is composed of green and blue people. A significant proportion of green people discriminate against the blues. The blues do not discriminate. The greens are wealthier and currently constitute almost all of the employers. The blues are mostly unskilled, but there are also many unskilled green workers. If a green employer discriminates he will not hire a blue worker unless he/she works at a significant discount compared to the green workers. Consider the following two situations.
1. There are no barriers to labor market competition and no mandates (no minimum wage or anything).
2. A minimum wage is set at a level above the free market wage that would employ all workers.
What will be the outcomes of the market process in these two situations? - explain in terms of employment, wages earned and segregated or integrated workplaces/firms (some green firms do and some do not discriminate).
