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A Theory of Group Inequality

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  • Seung Han Yoo

    ()
    (Department of Economics, Korea University, Seoul, Republic of Korea)

Abstract

This paper offers a model in which there is direct competition between different groups. We deliberately endow an environment with many employers and workers in which opportunities are limited such that each employer is randomly matched with two workers from the entire worker population, which consists of two ex ante identical sub-groups, and selects at most one of them. We show that with the competition, a set of feasible equilibria has a con.ict structure unlike the conflict-free structure found in typical statistical discrimination models, and that we can find employers' strategy such that employers benefit from discrimination, and this strategy can be sustained as a collusion between employers and an advantaged group in a repeated game.

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File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1309.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number 1309.

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Date of creation: 2013
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Handle: RePEc:iek:wpaper:1309

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Related research

Keywords: Statistical discrimination; Group inequality; Asymmetric information;

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References

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  1. Oded Galor & Omer Moav, 2004. "From Physical to Human Capital Accumulation: Inequality and the Process of Development," Review of Economic Studies, Wiley Blackwell, vol. 71(4), pages 1001-1026, October.
  2. Fudenberg, Drew & Kreps, David M & Maskin, Eric S, 1990. "Repeated Games with Long-run and Short-run Players," Review of Economic Studies, Wiley Blackwell, vol. 57(4), pages 555-73, October.
  3. Moro,A. & Norman,P., 2001. "A general equilibrium model of statistical discrimination," Working papers 4, Wisconsin Madison - Social Systems.
  4. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, March.
  5. Shubham Chaudhuri & Rajiv Sethi, 2008. "Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?," Review of Economic Studies, Oxford University Press, vol. 75(2), pages 579-596.
  6. Lawrence E. Blume, 2005. "Learning and Statistical Discrimination," American Economic Review, American Economic Association, vol. 95(2), pages 118-121, May.
  7. Larry Samuelson & George J. Mailath & Avner Shaked, 2000. "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," American Economic Review, American Economic Association, vol. 90(1), pages 46-72, March.
  8. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  9. Stiglitz, Joseph E, 1973. "Approaches to the Economics of Discrimination," American Economic Review, American Economic Association, vol. 63(2), pages 287-95, May.
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