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Statistical Discrimination and Efficiency

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  • Peter Norman

Abstract

This paper asks whether statistical discrimination is a market failure. I consider the problem for a utilitarian social planner who operates in an environment that can generate statistical discrimination as an equilibrium phenomenon. It is found that there are potential efficiency gains from discrimination in terms of reduced "mismatch" between workers and jobs. Whether the solution to the planning problem involves discrimination depends on the trade-off between the informational gains of specialization and the losses in terms of increased investment costs. Copyright The Review of Economic Studies Limited, 2003.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 70 (2003)
Issue (Month): 3 (07)
Pages: 615-627

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Handle: RePEc:bla:restud:v:70:y:2003:i:3:p:615-627

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Cited by:
  1. Lommerud, K.E. & Vagstad, S., 2000. "Mommy Tracks and Public Policy: On Self-Fulfilling Prophecies and Gender Gaps in Promotion," Norway; Department of Economics, University of Bergen 0600, Department of Economics, University of Bergen.
  2. Hanming Fang, 2001. "Social Culture and Economic Performance," American Economic Review, American Economic Association, vol. 91(4), pages 924-937, September.
  3. Shubham Chaudhuri & Rajiv Sethi, 2003. "Statistical discrimination with neighborhood effects: Can integration eliminate negative stereotypes?," Discussion Papers 0304-09, Columbia University, Department of Economics.
  4. Nicola Persico, 2002. "Racial Profiling, Fairness, and Effectiveness of Policing," American Economic Review, American Economic Association, vol. 92(5), pages 1472-1497, December.
  5. Fang, Hanming & Norman, Peter, 2001. "Government-Mandated Discriminatory Policies," Working Paper Series 562, Research Institute of Industrial Economics.
  6. Pfeifer, Christian & Sohr, Tatjana, 2008. "Analysing the Gender Wage Gap Using Personnel Records of a Large German Company," IZA Discussion Papers 3533, Institute for the Study of Labor (IZA).
  7. Dragos BIGU, 2009. "Discrimination and Profit," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(5), pages 1021-1027, December.
  8. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
  9. Popov, Sergey V. & Bernhardt, Dan, 2009. "Fraternities and labor market outcomes," MPRA Paper 18853, University Library of Munich, Germany.
  10. Raymond Fisman & Daniel Paravisini & Vikrant Vig, 2012. "Cultural Proximity and Loan Outcomes," Working Papers id:5036, eSocialSciences.
  11. Bøg, Martin & Kranendonk, Erik, 2011. "Labor market discrimination of minorities? yes, but not in job offers," MPRA Paper 33332, University Library of Munich, Germany.
  12. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2004. "The Economics of Discrimination: Equity, Equality and Diversity in the New European Constitution," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 84-95, October.

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