Hooray for competition : what fights discrimination?

In class we have stressed again and again the benefits of competition.  In addition, we looked today at arbitrage as what consumers might do and its consequences for the ability of firms to price discriminate.  Here's a lovely example of firms doing it and its consequences for the ability of other firms to price discriminate, from The Economist.
 
 Gender arbitrage in South Korea: If South Korean firms won’t make use of female talent, foreigners will
Oct 21st 2010 | Seoul

"Working women in South Korea earn 63% of what men do. Not all of this is the result of discrimination, but some must be. South Korean women face social pressure to quit when they have children, making it hard to stay on the career fast track. Many large companies have no women at all in senior jobs.


This creates an obvious opportunity. If female talent is undervalued, it should be plentiful and relatively cheap. Firms that hire more women should reap a competitive advantage. And indeed, there is evidence that one type of employer is doing just that.


Jordan Siegel of Harvard Business School reports that foreign multinationals are recruiting large numbers of educated Korean women.


South Korea is the ideal environment for gender arbitrage. The workplace may be sexist, but the education system is extremely meritocratic. Lots of brainy female graduates enter the job market each year. In time their careers are eclipsed by those of men of no greater ability. This makes them poachable. Goldman Sachs, an American investment bank, has more women than men in its office in Seoul.


 Firms will have to use all the talent they can find. If they don’t, their rivals will."

This finding is exactly that found by Sandra Black, page 41ff. She found that the opening of US state banks to competition raised the relative wages of women as new entrants hired hitherto low paid women and bid up their relative wages.

Corporate tax rates, 2010 data

Following from last week's lecture, what do you think would happen to corporate tax rates as the world becomes more globalised?  To check your answer have a look at page 29 of today's KPMG report.

Readings for Students from last week's lecture

Some recent posts to complement last week's supply-and-demand sessions

1. The incredible Brad de Long on markets, consumer and producer surplus.
2. From Freakonomics a long and thoughtful piece on whether people really do respond to incentives
3. Supply and demand in the university market. 
4. Monetary estimates of externalities from the Department of Transport, para 46.  Thanks to Geoff Riley for the tip.  

Markets everywhere

http://www.bbc.co.uk/news/11559801 reports that Fifa is investigating allegations that two of its officials offered to sell their votes in the contest to host the 2018 World Cup.  The key assumption in Economics is of course that people respond to incentives.  Do other social sciences have this at their core? I'm not sure.  One might say of course that most of the officials at FIFA are not selling their votes: but if enough do, that would be enough to determine the outcome of the competition.  Second key economic insight: everything is determined at the margin.