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Discrimination: Believe it and You'll See It

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Abstract

This paper presents a model where workers’beliefs and expectations about discrimination are significant. Identical firms announce vacancies and starting wages and workers apply to the firm. Workers are of two types, b and g, but identical in productivity. Firms do not prefer a particular type of worker over another. There is however a common belief among all workers that type b workers are discriminated against. This causes type b workers to avoid applying for jobs that offer wages perceived to be too high, since such workers believe that they don’t stand a chance against type g workers. In equilibrium some firms announce a job and high wages thereby attracting only type g workers, while others announce with low wages thereby attracting only type b workers.

Suggested Citation

  • Ahmed, Ali M., 2006. "Discrimination: Believe it and You'll See It," CAFO Working Papers 2006:10, Linnaeus University, Centre for Labour Market Policy Research (CAFO), School of Business and Economics.
    • Handle: RePEc:hhs:vxcafo:2006_010
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    More about this item

    Keywords

    Discrimination; Workers’ beliefs; Directed search;
    All these keywords.

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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