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Discrimination And Employment Protection

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  • Steinar Holden
  • Åsa Rosén

Abstract

We study a search model with employment protection legislation. We show that if the output from the match is uncertain at the hiring stage, a discriminatory equilibrium may exist in which workers with the same productive characteristics are subject to different hiring standards. If a bad match takes place, discriminated workers will take longer to find another job, prolonging the costly period for the firm. This makes it less profitable for firms to hire discriminated workers, thus sustaining the discrimination. In contrast to Becker's model, the existence of employers with a taste for discrimination may make it more profitable to discriminate, even for firms without discriminatory preferences.

Suggested Citation

  • Steinar Holden & Åsa Rosén, 2014. "Discrimination And Employment Protection," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1676-1699, December.
  • Handle: RePEc:bla:jeurec:v:12:y:2014:i:6:p:1676-1699
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    File URL: http://hdl.handle.net/10.1111/jeea.12097
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    Cited by:

    1. Deschamps, Pierre & De Sousa, José, 2021. "Labor mobility and racial discrimination," European Economic Review, Elsevier, vol. 135(C).
    2. Bruno Decreuse & Linas Tarasonis, 2016. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Working Papers halshs-01327961, HAL.
    3. Barth, Erling & Bratsberg, Bernt & Raaum, Oddbjørn, 2012. "Immigrant wage profiles within and between establishments," Labour Economics, Elsevier, vol. 19(4), pages 541-556.
    4. Bruno Decreuse & Linas Tarasonis, 2021. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Annals of Economics and Statistics, GENES, issue 143, pages 105-136.
    5. Heyman, Fredrik & Norbäck, Pehr-Johan & Persson, Lars, 2017. "Gender Wage Gap at the Top, Job Inflexibility and Product Market Competition," Working Paper Series 1169, Research Institute of Industrial Economics, revised 12 Jul 2018.
    6. Fredrik Heyman & Pehr-Johan Norbäck & Lars Persson, 2020. "Talent, Career Choice and Competition: The Gender Wage Gap at the Top," CESifo Working Paper Series 8657, CESifo.
    7. Bond, Timothy N. & Lehmann, Jee-Yeon K., 2018. "Prejudice and racial matches in employment," Labour Economics, Elsevier, vol. 51(C), pages 271-293.
    8. Emiko Usui, 2015. "Occupational gender segregation in an equilibrium search model," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-14, December.
    9. Lagerlöf, Johan N.M., 2020. "Strategic gains from discrimination," European Economic Review, Elsevier, vol. 122(C).
    10. Basu,Kaushik, 2015. "Discrimination as a coordination device : markets and the emergence of identity," Policy Research Working Paper Series 7490, The World Bank.
    11. Johan N. M. Lagerlöf, 2016. "Strategic Gains from Labor Market Discrimination," Discussion Papers 16-03, University of Copenhagen. Department of Economics.

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    More about this item

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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