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Government-Mandated Discriminatory Policies: Theory And Evidence

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  • Hanming Fang
  • Peter Norman

Abstract

We study an economy with private and public sectors in which workers invest in imperfectly observable skills that are important to the private sector but not to the public sector. Government regulation allows native majority workers to be employed in the public sector with positive probability while excluding the minority from it. We show that even when the public sector offers the highest wage rate, it is still possible that the discriminated group is, on average, economically more successful. The widening Chinese/Malay wage gap in Malaysia since the adoption of its New Economic Policy in 1970 supports our model. Copyright 2006 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 47 (2006)
Issue (Month): 2 (05)
Pages: 361-389

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Handle: RePEc:ier:iecrev:v:47:y:2006:i:2:p:361-389

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Cited by:
  1. Fabrizio Adriani & Silvia Sonderegger, 2013. "Signaling about norms: Socialization under strategic uncertainty," Discussion Papers 2013-11, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Sato, Hiroshi & Li, Shi, 2007. "Class Origin, Family Culture, and Intergenerational Correlation of Education in Rural China," IZA Discussion Papers 2642, Institute for the Study of Labor (IZA).
  3. Dahm, Matthias & Esteve, PatrĂ­cia,, 2013. "Affirmative Action through Extra Prizes," Working Papers 2072/222197, Universitat Rovira i Virgili, Department of Economics.
  4. Sato, Hiroshi & Li, Shi, 2013. "Influence Of Family Background On Current Family Wealth In Rural China," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 95-117, June.
  5. Popov, Sergey V. & Bernhardt, Dan, 2009. "Fraternities and labor market outcomes," MPRA Paper 18853, University Library of Munich, Germany.
  6. Carvalho, Jean-Paul & Koyama, Mark, 2013. "Resisting Education," MPRA Paper 48048, University Library of Munich, Germany.
  7. Sato, Hiroshi & Li, Shi, 2007. "Revolution and Family in Rural China: Influence of Family Background on Current Family Wealth," IZA Discussion Papers 3223, Institute for the Study of Labor (IZA).

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