A Theory of Discrimination Based on Signaling and Strategic Information Acquisition
The paper develops a `signaling' based theory of discrimination where workers face different incentives for skill acquisition purely because of their group membership. Workers belonging to the disadvantaged group bear substantial signaling cost. The difference in signaling costs between groups is not due to any unexplained group heterogeneity but discriminatory information policy of the employer. Based on its belief about the group, an employer may not acquire relevant information about the workers of this group, even if such information were costless. It is shown that affirmative action policies can help in the presence of non-convex signaling technology. Factors like co-ordination amongst workers, presence of a 'dynamic' labor market and sub-group formation seem to affect the nature and degree of discrimination.
|Date of creation:||01 Aug 2000|
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- Lundberg, Shelly J & Startz, Richard, 1983.
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- George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
- Cho, In-Koo & Sobel, Joel, 1990. "Strategic stability and uniqueness in signaling games," Journal of Economic Theory, Elsevier, vol. 50(2), pages 381-413, April.
- 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.
- Coate, S. & Loury, G.C., 1992. "Will Affirmative Action Policies Eliminate Negative Stereotypes?," Papers 3, Boston University - Department of Economics.
- Paul Milgrom & Sharon Oster, 1987. "Job Discrimination, Market Forces, and the Invisibility Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 453-476.
- Paul R. Milgrom, 1984. "Job Discrimination, Market Forces and the Invisibility Hypothesis," Cowles Foundation Discussion Papers 708R, Cowles Foundation for Research in Economics, Yale University, revised 1985.
- Glenn C. Loury, 1998. "Discrimination in the Post-Civil Rights Era: Beyond Market Interactions," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 117-126, Spring. Full references (including those not matched with items on IDEAS)
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