Search Discrimination, Human Capital Accumulation, and Intergenerational Mobility
Unequal outcomes for blacks and whites include earnings inequality, which increases with age, and differences in unemployment rates. I develop a matching model with search discrimination and human capital accumulation. Multiple equilibria exist, one with low unemployment rates and steep earnings profiles and one with high unemployment rates and flat earnings profiles. Hence, two groups of workers that differ on an observable, exogenous characteristic (say, race) can be in two different equilibria. In the high unemployment equilibrium, less vacancies are posted leading to the concept of search discrimination. A quota system can remove the discriminatory outcomes. However, if parents' investment decisions affect the investment decisions of their children, policies which remove the search discrimination through a quota system still lead to unequal results in the short run. In this case, whites may want to subsidize black investment as black investment improves the labor market outcomes for whites.
|Date of creation:||2000|
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- Moro, Andrea & Norman, Peter, 2003.
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- Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-1240, December.
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- Larry Samuelson & George J. Mailath & Avner Shaked, 2000. "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," American Economic Review, American Economic Association, vol. 90(1), pages 46-72, March.
- George J. Mailath & Larry Samuelson & Avner Shaked, "undated". ""Endogenous Inequality in Integrated Labor Markets with Two-sided Search''," CARESS Working Papres 98-06, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- George J. Mailath & Larry Samuelson & Avner Shaked, "undated". "Endogenous Inequality in Integrated Labor Markets with Two-sided Search," Penn CARESS Working Papers 90ff654ed11b714e3f7530c57, Penn Economics Department.
- Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
- Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391. Full references (including those not matched with items on IDEAS)
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