On Bonuses to End Job Discrimination

R. Jackson ("Job Discrimination and the Use of Bonuses," American Journal of Economics & Sociology, 1973, 32, 351 -- 366) "assumes that Non-Whites & White workers are perfect substitutes" when he argues "that a plan which pays bonuses for hiring Non-Whites & exacts penalities for not doing so leads to the greatest number of Non-Whites being hired without changing the utility level of the employer." His claim that only prejudice causes whites to be hired shows that "perfect substitutes" is an ambiguous term that needs to be clearly defined. Evidence is presented that reveals that "Jackson's case is a special one so that even if wages of Non-Whites are lower than those for Whites, it is possible to have only Whites hired at the point of profit maximization." The equality of marginal physical products is not guaranteed in this assumption of "perfect substitution." 1 Figure. G. Simpson.