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Equal-treatment policy in a random search model with taste discrimination

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  • Kaas, Leo
  • Lu, Jun
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Abstract

We consider a search model of the labor market with two types of equally productive workers and two types of firms, discriminators and non-discriminators. Without policy intervention, there is wage dispersion between and within the two worker groups, but all wage differences become negligible when the taste for discrimination is small. We analyze the effect of an equal-pay policy, both in combination with affirmative action and without. When equal opportunity of hiring cannot be enforced, wage dispersion increases and wages for minority workers fall substantially relative to laissez faire. Sometimes also the wage gap between worker groups widens in response to the policy.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 4 (August)
Pages: 699-709

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Handle: RePEc:eee:labeco:v:17:y:2010:i:4:p:699-709

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Search model Wage dispersion Discrimination Equal-pay policy;

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  1. Audra J. Bowlus & Zvi Eckstein, 2002. "Discrimination and Skill Differences in an Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1309-1345, November.
  2. Harry Holzer & David Neumark, 1999. "Assessing Affirmative Action," NBER Working Papers 7323, National Bureau of Economic Research, Inc.
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  8. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, American Economic Association, vol. 62(4), pages 659-61, September.
  9. Neumark, David, 1996. "Sex Discrimination in Restaurant Hiring: An Audit Study," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 915-41, August.
  10. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," American Economic Review, American Economic Association, American Economic Association, vol. 95(4), pages 1327-1340, September.
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  12. Richard Startz & Lundberg, . "Private Discrimination and Social Intervention in Competitive Labor Markets," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 19-81, Wharton School Rodney L. White Center for Financial Research.
  13. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, American Economic Association, vol. 83(5), pages 1220-40, December.
  14. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, American Economic Association, vol. 94(4), pages 991-1013, September.
  15. Bisping, Timothy O & Fain, James R, 2000. "Job Queues, Discrimination, and Affirmative Action," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 38(1), pages 123-35, January.
  16. Asa Rosen, 2003. "Search, Bargaining, and Employer Discrimination," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 21(4), pages 807-830, October.
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  18. Welch, Finis, 1976. "Employment Quotas for Minorities," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(4), pages S105-39, August.
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