EFFICIENT EQUITY - REMOVING SALARY DISCRIMINATION BY MEETING STATISTICAL LEGAL CONSTRAINTS AT LEAST-COST

Legal obligations embodied in statistical constraints on pay different ials represent an externally-imposed distortion on cost minimization. We argue that the competitive firm ought to meet such constraints at l east cost. This argument is illustrated by reference to a major case o f alleged gender discrimination in academic salaries. An alternative a pproach is presented that would have eliminated the discrimination fin ding in this case at a significant cost saving.