What is discrimination, and how does it affect labor market participation and the acquisition of human capital? It is useful to first distinguish between prejudice and discrimination. Prejudice is a dislike or misperception based on innate characteristics such as race, sex, or age. Discrimination is the act of treating people differently because of their membership in a group. Discrimination occurs when one’s action has an adverse impact (e.g., earning a lower wage, being denied a service by business or government, etc.) on people because of their group membership. Prejudice and discrimination are linked, but one does not necessarily imply the other. One may be prejudiced against a group of people but lack the ability to act on it in a way that causes harm. Conversely, ...