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Ethnic Diversity, Market Structure and Risk Sharing in Developing Countries

  • Jellal, Mohamed
  • Zenou, Yves

The paper mainly addresses three questions: 1) do workers tend to be employed by employers of the same ethnic group; 2) what is the structure of the equilibrium wage contract; and 3) do more ethnically homogeneous labour markets tend to have different labour contracts than more ethnically diversified ones. The answer to the first question is in the affirmative - in equilibrium all employers offer the same wage contract and workers are hired by employers of the closest ethnic affiliation. In terms of the equilibrium wage contract, its nature depends on the attitude towards risk of both sides of the market. Finally, the answer to the third question is also in the affirmative since the more homogenous the labour market, the more deterministic is the wage.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5366.

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Date of creation: Nov 2005
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Handle: RePEc:cpr:ceprdp:5366
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