For example, suppose a Serbian employer hates Croatians. There is some amount of money sufficient to make the Serbian hire the Croatian in spite of his discriminatory taste. Most employers have a taste for discrimination against Asians. No one else has discriminatory tastes. Asian and non-Asian workers are equally productive.
Labor markets are competitive and there are no anti-discrimination laws.
Labor demand for Asians is lower and they earn lower wages - at first. E. More racism thus means lower profits. Less racist employers hire cheaper Asian labor, while more racist employers higher more expensive non-Asian labor. F. Thus, over time the most racially tolerant employers become a larger and larger part of the market, and racist employers are driven out of business. So the wage gap falls.