What role might discrimination play in accounting for income inequality?

What will be an ideal response?

If the levels of VMP of labor for a racial group or one sex are perceived to be higher than that of another racial group or the other sex, then the equilibrium wages earned will vary across these groups, despite the fact that the two groups have equal ability. Economists disagree to the extent that discrimination pervades the labor market. One line of reasoning states that those firms that practice race or sex discrimination in the labor market face higher production costs (pay higher wages for the same value of marginal product) than those firms that do not. If this line of reasoning is correct, the profit margins for the firms practicing discrimination will be lower and the market price of their goods and services would be higher than non-discriminating firms. Either way, the market pressures increase the opportunity cost to firms (and the consumers who buy their goods) for practicing race or sex discrimination, eventually eliminating these practices.