Statistical Discrimination in a Competitive Labor Market / Jonathan B. Berk.

Format:

Book

Author/Creator:

Berk, Jonathan B.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6871.

NBER working paper series no. w6871

Language:

English

Subjects (All):

Discrimination in employment.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Cambridge, Massachusetts : National Bureau of Economic Research, 1999.

Summary:

This paper studies the effect of employee job selection in a model of statistical discrimination in a competitive labor market. In an economy in which there are quality differences between groups, a surprisingly strong condition is required to guarantee discrimination against the worse qualified group --- MLRP must hold. In addition, because of the self-selection bias induced by competition, the resulting discrimination is small when compared to the magnitude of the underlying quality differences between groups. In cases in which the discrimination results because employers' ability to measure qualifications differs from one group to another, the conditions under which one group is discriminated against are much weaker. In general, the group employers know least about is always favored. The economic impact of discrimination that is derived from quality differences between groups is shown to be quite different to the economic impact of discrimination that derives from differences in employer familiarity between groups. In the latter case, for a set of equally qualified employees, it is possible for members of the group that is discriminated against to have higher wages. Finally, we show how the results can be used to explain a number of empirical puzzles that are documented in the literature.

Notes:

Print version record

January 1999.