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Abstract

Can groups with equal productive potential end up in equilibria in which they get different average wages? We consider a simple model of statistical discrimination that shows that this might happen. Discrimination in this model is possible for the existence of multiple equilibria. We study what determines multiplicity, what policies might be used to eliminate discrimination in this situation and, finally, we test the main hypothesis of this model, namely, that identical groups will be treated equally. Our empirical results suggest, however, that discrimination is more due to structural differences in the wage schedules faced by black and white males.

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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1758.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1758

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1. Andrea Moro & Peter Norman, . "Affirmative Action in a Competitive Economy," Penn CARESS Working Papers ca48ba70927f48a4e11034658, Penn Economics Department.
   
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   • Andrea Moro & Peter Norman, . ""Affirmative Action in a Competitive Economy''," CARESS Working Papres 96-08, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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4. Andrea Moro, 2003. "The Effect Of Statistical Discrimination On Black-White Wage Inequality: Estimating A Model With Multiple Equilibria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 467-500, 05.
5. James J. Heckman, 1998. "Detecting Discrimination," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 101-116, Spring.
6. Frijters, P., 1998. "Discrimination and job-uncertainty," Journal of Economic Behavior & Organization, Elsevier, vol. 36(4), pages 433-446, September.
   
   • P. Frijters, 1997. "Discrimination and job-uncertainty," Labor and Demography 9706001, EconWPA.
7. O'Neill, June, 1990. "The Role of Human Capital in Earnings Differences between Black and White Men," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 25-45, Fall.
8. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
9. Stephen V. Cameron & James J. Heckman, 1991. "The Nonequivalence of High School Equivalents," NBER Working Papers 3804, National Bureau of Economic Research, Inc.
   
   • Cameron, Stephen V & Heckman, James J, 1993. "The Nonequivalence of High School Equivalents," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 1-47, January.
10. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
11. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
12. Richard Startz & Lundberg, . "Private Discrimination and Social Intervention in Competitive Labor Markets," Rodney L. White Center for Financial Research Working Papers 19-81, Wharton School Rodney L. White Center for Financial Research.
    
    • Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-47, June.
13. Lundberg, Shelly J, 1991. "The Enforcement of Equal Opportunity Laws under Imperfect Information: Affirmative Action and Alternatives," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 309-26, February.
14. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August.
15. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-40, December.
    
    • Coate, S. & Loury, G.C., 1992. "Will Affirmative Action Policies Eliminate Negative Stereotypes?," Papers 3, Boston University - Department of Economics.

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