This paper analyses Becker´s (1971) theory of employer discrimination within a search and wage-bargaining setting. Discriminatory firms pay workers who are discriminated against less, and apply stricter hiring-criteria to these workers. It is shown that the highest profits are realized by firms with a positive discrimination coefficient. Moreover, once ownership and control are separated, both highest profits and highest utility may be realized by firms with a positive discrimination coefficient. Thus, market forces, like entry and/or takeovers do not ensure that wage differentials due to employer discrimination will disappear.
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number
1998:13.
Length: 30 pages Date of creation: 04 Jun 1998 Date of revision: Publication status: Forthcoming in Journal of Labor Economics, 2003. Handle: RePEc:hhs:uunewp:1998_013
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Pissarides, C A, 1984.
"Efficient Job Rejection,"
Economic Journal,
Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen.
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