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Diversity in the Workplace

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  • John Morgan
  • Felix V�rdy

Abstract

We study minority representation in the workplace when employers engage in optimal sequential search and minorities convey noisier signals of ability than mainstream job candidates. The greater signal noise makes it harder for minorities to change employers' prior beliefs. When employers are selective, this leads to minority underrepresentation in the workplace. Diversity improves when the cost of interviewing, the average skill level of candidates, or the opportunity cost of not hiring increases. Reducing the cost of firing also increases minority representation. When employers are sufficiently unselective, the rigidity of employers' beliefs leads to overrepresentation of minorities. (JEL D83, J15, J24, J71, M12, M51)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 99 (2009)
Issue (Month): 1 (March)
Pages: 472-85

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Handle: RePEc:aea:aecrev:v:99:y:2009:i:1:p:472-85

Note: DOI: 10.1257/aer.99.1.472
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  1. Susan Athey, 1998. "Mentoring and Diversity," Working papers 98-2, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," NBER Working Papers 9873, National Bureau of Economic Research, Inc.
  3. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-33, April.
  4. Kenneth J. Arrow, 1998. "What Has Economics to Say about Racial Discrimination?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 91-100, Spring.
  5. Heckman, James J & Honore, Bo E, 1990. "The Empirical Content of the Roy Model," Econometrica, Econometric Society, vol. 58(5), pages 1121-49, September.
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  7. Lang, Kevin, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 363-82, May.
  8. Lundberg, S. & Startz, R., 1992. "On the Persistence of Racial Inequality," Working Papers 92-04, University of Washington, Department of Economics.
  9. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
  10. A Rosen, 1992. "An Equilibrium Search-Matching Model of Discrimination," CEP Discussion Papers dp0097, Centre for Economic Performance, LSE.
  11. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  12. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
  13. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-71, June.
  14. Michael R. Baye & John Morgan & Patrick Scholten, 2006. "Information, Search, and Price Dispersion," Working Papers 2006-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  15. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
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Cited by:
  1. Esther Hauk & Hannes Mueller, 2010. "Cultural Leaders and the Clash of Civilizations," Working Papers 481, Barcelona Graduate School of Economics.
  2. repec:dgr:uvatin:2012068 is not listed on IDEAS
  3. Sander Hoogendoorn & Mirjam van Praag, 2012. "Ethnic Diversity and Team Performance: A Field Experiment," Tinbergen Institute Discussion Papers 12-068/3, Tinbergen Institute, revised 01 May 2014.

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