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Competition, Efficiency, and Discrimination in Job Markets With Learning

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  • Gian Luca Carniglia
  • Mauricio Ribeiro

Abstract

Will competition between firms in the job market increase efficiency and reduce discrimination? We show that when the worker’s productivity is unknown and the minimum wage is not too low, competition can lead to a constrained-inefficient and discriminatory outcome. Under these conditions, competition creates a hold-up problem that reduces the firm’s incentives to experiment, generating inefficiency. Since competition amplifies this hold-up problem, workers of social groups that face greater informational disadvantages are more likely to remain unemployed as competition increases, increasing discrimination

Suggested Citation

  • Gian Luca Carniglia & Mauricio Ribeiro, 2025. "Competition, Efficiency, and Discrimination in Job Markets With Learning," Bristol Economics Discussion Papers 25/807, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:25/807
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    References listed on IDEAS

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    1. Stijn Baert & Bart Cockx & Niels Gheyle & Cora Vandamme, 2015. "Is There Less Discrimination in Occupations Where Recruitment Is Difficult?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 467-500, May.
    2. Chang, Chun & Wang, Yijiang, 1996. "Human Capital Investment under Asymmetric Information: The Pigovian Conjecture Revisited," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 505-519, July.
    3. Bruce C. Greenwald, 1986. "Adverse Selection in the Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 325-347.
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