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Identification, screening and stereotyping in labor market discrimination

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  • Vendrik,Maarten C.M.
  • Schwieren,Christiane

    (METEOR)

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    Abstract

    Social-psychological research reveals two opposite ways in which a person can respond to increased feelings of uncertainty in decision-making. First, he (or she) may try to reduce his uncertainty by searching for more specific information. This leads to less stereotyping and discrimination. Second, he may identify more strongly with a salient social group he belongs to (his ingroup, e.g. men). This induces him to rely more on stereotypic perceptions and prejudices, and hence to discriminate more against an outgroup (e.g. women). This paper develops a microeconomic model that integrates both responses in the context of hiring and pay decisions by an employer. The model determines simultaneous equilibrium levels of expenditures on screening of job applicants and ingroup identification. Increasing competition in the product market makes the employer feel more uncertain about his profits, but also raises the opportunity cost of screening expenditures. The latter rise elicits substitution of ingroup identification for screening expenditures, and hence enhances discrimination. Affirmative action has the opposite effect by raising the marginal benefits of screening expenditures. Some experimental and empirical evidence is briefly discussed.

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    Bibliographic Info

    Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 013.

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    Date of creation: 2005
    Date of revision:
    Handle: RePEc:unm:umamet:2005013

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    Keywords: microeconomics ;

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    1. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
    2. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier.
    3. Marjorie Baldwin & William G. Johnson, 1996. "The employment effects of wage discrimination against black men," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(2), pages 302-316, January.
    4. Azmat, Ghazala & Güell, Maia & Manning, Alan, 2004. "Gender Gaps in Unemployment Rates in OECD Countries," CEPR Discussion Papers 4307, C.E.P.R. Discussion Papers.
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    6. Vendrik, Maarten C. M., 2003. "Dynamics of a household norm in female labour supply," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 823-841, March.
    7. Harry J. Holzer & David Neumark, 1998. "What Does Affirmative Action Do?," NBER Working Papers 6605, National Bureau of Economic Research, Inc.
    8. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," NBER Working Papers 10269, National Bureau of Economic Research, Inc.
    9. Roland G. Fryer, Jr. & Matthew O. Jackson, 2003. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," NBER Working Papers 9579, National Bureau of Economic Research, Inc.
    10. Comanor, William S, 1973. "Racial Discrimination in American Industry," Economica, London School of Economics and Political Science, vol. 40(160), pages 363-78, November.
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    12. Preston, Ian & Szymanski, Stefan, 2000. "Racial Discrimination in English Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 342-63, September.
    13. Haagsma, Rein, 1993. "Is statistical discrimination socially efficient?," Information Economics and Policy, Elsevier, vol. 5(1), pages 31-50, January.
    14. Tiedens, Larissa Z. & Linton, Susan, 2001. "Judgment under Emotional Uncertainty: The Effects of Specific Emotions and Their Associated Certainty Appraisals on Information Processing," Research Papers 1629, Stanford University, Graduate School of Business.
    15. Oster, Sharon M, 1975. "Industry Differences in the Level of Discrimination against Women," The Quarterly Journal of Economics, MIT Press, vol. 89(2), pages 215-29, May.
    16. Wallace Hendricks & Lawrence DeBrock & Roger Koenker, 2003. "Uncertainty, Hiring, and Subsequent Performance: The NFL Draft," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 857-886, October.
    17. Stefan Szymanski, 2000. "A Market Test for Discrimination in the English Professional Soccer Leagues," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 590-603, June.
    18. Shepherd, William G & Levin, Sharon G, 1973. "Managerial Discrimination in Large Firms," The Review of Economics and Statistics, MIT Press, vol. 55(4), pages 412-22, November.
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