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Statistical discrimination from composition effects in the market for low-skilled workers

  • Masters, Adrian

In a random search environment with two racial groups each composed of identical numbers of high and low productivity workers, firms use an imperfect screening device (interviews) to control hiring. If inconclusive interviews lead firms to hire majority workers but not minority workers, then the unemployment pool for majority workers is of higher average quality. This can justify the initial hiring choices. Color-blind hiring always eliminates racial disparities but is not necessarily beneficial; in the USA it would improve welfare with only a brief small increase in white unemployment.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 26 (2014)
Issue (Month): C ()
Pages: 72-80

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Handle: RePEc:eee:labeco:v:26:y:2014:i:c:p:72-80
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  7. Krusell, Per & Mukoyama, Toshihiko & Rogerson, Richard & Sahin, Ayseg├╝l, 2011. "A three state model of worker flows in general equilibrium," Journal of Economic Theory, Elsevier, vol. 146(3), pages 1107-1133, May.
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  9. Sattinger, Michael, 1998. "Statistical Discrimination with Employment Criteria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 205-37, February.
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  12. Masters, Adrian, 2009. "Matching with interviews," Journal of Economic Dynamics and Control, Elsevier, vol. 33(4), pages 938-954, April.
  13. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-40, December.
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