An Experimental Study of Statistical Discrimination by Employers
AbstractThis article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types. The question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group. If prior opinions are weak, the employer will use information from the workplace to quickly update any incorrect group-based stereotypes it may have. On the other hand, if priors are heavily weighted, incorrect initial perceptions will result in persistent wage differences. Our experimental findings are twofold. First, subjects' (employers') behavior moves quickly toward optimal choices. Second, strong priors are hard to establish. These results suggest that it would take a long time for employers to form group-based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes.
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Bibliographic InfoPaper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2001-07.
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- Nick Feltovich & Chris Papageorgiou, 2004. "An Experimental Study of Statistical Discrimination by Employers," Southern Economic Journal, Southern Economic Association, vol. 70(4), pages 837-849, April.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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