Asymmetric Information and Wage Differences Across Groups: Another Look at Statistical Discrimination
An alternative theoretical explanation for the existence of wage differentials between minority and majority groups is proposed. It is demonstrated that wage differentials that arise from uncertainty about minority group abilities relative to those of the majority group are not exclusively the result of statistical discrimination. It is proposed here that wage differentials are made up of two elements: a statistical discrimination component and a wage disparity component. Wage disparity differentials are a consequence of uncertainty over the flow of labor factor services affecting the production technology of the firm. Wage disparity is demonstrated to be a competitive outcome resulting from the minority group's higher variance associated with the flow of factor services relative to the majority group. Consequently, in response to lower expected average and marginal productivity, this group of workers receives a lower wage or employment level. It is established that nondiscriminatory wage differentials can persist in a competitive risk neutral market environment in the long run.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:mve:journl:v:30:y:2004:i:1:p:1-19. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ken Brown)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.