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Discrimination and Employment Protection

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Author Info
Steinar Holden ()
Asa Rosen ()
Abstract

We study a search model with employment protection legislation. We show that if the output from the match is uncertain ex ante, there may exist a discriminatory equilibrium where workers with the same productive characteristics are subject to different hiring standards. If a bad match takes place, discriminated workers will use longer time to find another job, prolonging the costly period for the firm. This makes it less profitable for the firms to hire the discriminated workers, thus sustaining discrimination. In contrast to standard models, the existence of employers with a taste for discrimination may make it more profitable to discriminate also for firms without discriminatory preferences.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 2822.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2822

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Related research
Keywords: discrimination; employment protection; hiring standards;

Find related papers by JEL classification:
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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  19. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," Working Papers 2009-08, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
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