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Discrimination Without Taste - How Discrimination can Spillover and Persist

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  • Rajesh Ramachandran
  • Christopher Rauh

Abstract

We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a channel of discrimination in activities requiring the input of more than one individual for production to occur. We show discrimination can persist forever under perfectly observable ability, when taste for discrimination has died out, and under absence of discriminatory social norms. Empirically, we analyze the market for self-employment in the US, a market requiring input from multiple sources. Consistent with the theoretical prediction, we find beliefs about discrimination to be a significant negative correlate of self-employment rates of blacks in the US.

Suggested Citation

  • Rajesh Ramachandran & Christopher Rauh, 2014. "Discrimination Without Taste - How Discrimination can Spillover and Persist," Cambridge Working Papers in Economics 1466, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1466
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    2. Daskalova, Vessela, 2018. "Discrimination, social identity, and coordination: An experiment," Games and Economic Behavior, Elsevier, vol. 107(C), pages 238-252.
    3. Lippens, Louis & Baert, Stijn & Ghekiere, Abel & Verhaeghe, Pieter-Paul & Derous, Eva, 2020. "Is labour market discrimination against ethnic minorities better explained by taste or statistics? A systematic review of the empirical evidence," GLO Discussion Paper Series 615, Global Labor Organization (GLO).
    4. Dewan, Torun & Wolton, Stephane, 2019. "A Political Economy of Social Discrimination," MPRA Paper 94394, University Library of Munich, Germany.

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    More about this item

    Keywords

    Discrimination; Coordination Failure; Beliefs;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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