Can Workers' Expectations Account for the Persistence of Discrimination?
AbstractThe paper explains how workers' expectations of being discriminated against can be self-confirming, accounting for the persistence of unequal outcomes in the labour market even beyond the causes that originally generated them. The theoretical framework used is a two-stage game of incomplete information in which one employer promotes only one among two workers after having observed their productivity, which is used as a signal of their ability. Workers who expect to be discriminated against exert a lower effort on average, because of a lower expected return, thereby being promoted less frequently even by unbiased employers. This implies that achievements of minority groups may not improve when the fraction of discriminatory employers actually decreases, and such a mechanism is robust both to trial work periods and to affirmative actions like quotas.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4490.
Length: 29 pages
Date of creation: Oct 2009
Date of revision:
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Find related papers by JEL classification:
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-07 (All new papers)
- NEP-CTA-2009-11-07 (Contract Theory & Applications)
- NEP-LAB-2009-11-07 (Labour Economics)
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