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Identification, screening and stereotyping in labor market discrimination

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Author Info
Vendrik,Maarten C.M.
Schwieren,Christiane (METEOR)
Abstract

Social-psychological research reveals two opposite ways in which a person can respond to increased feelings of uncertainty in decision-making. First, he (or she) may try to reduce his uncertainty by searching for more specific information. This leads to less stereotyping and discrimination. Second, he may identify more strongly with a salient social group he belongs to (his ingroup, e.g. men). This induces him to rely more on stereotypic perceptions and prejudices, and hence to discriminate more against an outgroup (e.g. women). This paper develops a microeconomic model that integrates both responses in the context of hiring and pay decisions by an employer. The model determines simultaneous equilibrium levels of expenditures on screening of job applicants and ingroup identification. Increasing competition in the product market makes the employer feel more uncertain about his profits, but also raises the opportunity cost of screening expenditures. The latter rise elicits substitution of ingroup identification for screening expenditures, and hence enhances discrimination. Affirmative action has the opposite effect by raising the marginal benefits of screening expenditures. Some experimental and empirical evidence is briefly discussed.

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Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 013.

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Date of creation: 2005
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Handle: RePEc:dgr:umamet:2005013

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Keywords: microeconomics ;

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  7. Haagsma, Rein, 1993. "Is statistical discrimination socially efficient?," Information Economics and Policy, Elsevier, vol. 5(1), pages 31-50, January. [Downloadable!] (restricted)
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  10. Azmat, Ghazala & Güell, Maia & Manning, Alan, 2004. "Gender Gaps in Unemployment Rates in OECD Countries," CEPR Discussion Papers 4307, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Oster, Sharon M, 1975. "Industry Differences in the Level of Discrimination against Women," The Quarterly Journal of Economics, MIT Press, vol. 89(2), pages 215-29, May. [Downloadable!] (restricted)
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  18. Wallace Hendricks & Lawrence DeBrock & Roger Koenker, 2003. "Uncertainty, Hiring, and Subsequent Performance: The NFL Draft," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 857-886, October. [Downloadable!]
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  21. Shepherd, William G & Levin, Sharon G, 1973. "Managerial Discrimination in Large Firms," The Review of Economics and Statistics, MIT Press, vol. 55(4), pages 412-22, November. [Downloadable!] (restricted)
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