Race or gender discrimination in employment is not a viable option for companies seeking to keep ahead of the competition.

As long ago as the 1950s, University of Chicago economist Gary Becker theorized that only employers in relatively uncompetitive markets could afford to practice discrimination. Employers in competitive markets risk being driven out of business by competitors unwilling to sacrifice profits simply to practice discrimination.

Recent research by economists Sandra E. Black of the Federal Reserve Bank of New York and Elizabeth Brainerd of Williams College throws new light on the issue.

• They explored how intensified competition from foreign businesses in the 1980s affected wages for women in two manufacturing sectors.

• The sectors were concentrated industries controlled by relatively few companies and competitive industries where market power was more widely dispersed.

• They found that gender wage gaps narrowed more rapidly in concentrated industries, which had formerly faced little competitive pressure to reduce discrimination.

Thus the sudden demands of new competition reduced the ability of employers to discriminate against women.

Source: Gene Koretz, "Helping Close the Gender Gap," Business Week, October 25, 1999.