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Diversity in the Workplace

  • John Morgan
  • Felix V�rdy

We study minority representation in the workplace when employers engage in optimal sequential search and minorities convey noisier signals of ability than mainstream job candidates. The greater signal noise makes it harder for minorities to change employers' prior beliefs. When employers are selective, this leads to minority underrepresentation in the workplace. Diversity improves when the cost of interviewing, the average skill level of candidates, or the opportunity cost of not hiring increases. Reducing the cost of firing also increases minority representation. When employers are sufficiently unselective, the rigidity of employers' beliefs leads to overrepresentation of minorities. (JEL D83, J15, J24, J71, M12, M51)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 99 (2009)
Issue (Month): 1 (March)
Pages: 472-85

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Handle: RePEc:aea:aecrev:v:99:y:2009:i:1:p:472-85
Note: DOI: 10.1257/aer.99.1.472
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  2. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are emily and greg more employable than lakisha and jamal? A field experiment on labor market discrimination," Natural Field Experiments 00216, The Field Experiments Website.
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  9. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
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