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Is Discrimination Due to a Coordination Failure?

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Listed:
  • Bart Hobijn

    (New York University)

  • Carlos A. Medina-Durango

    (New York University)

Abstract

Can groups with equal productive potential end up in equilibria in which they get different average wages? We consider a simple model of statistical discrimination that shows that this might happen. Discrimination in this model is possible for the existence of multiple equilibria. We study what determines multiplicity, what policies might be used to eliminate discrimination in this situation and, finally, we test the main hypothesis of this model, namely, that identical groups will be treated equally. Our empirical results suggest, however, that discrimination is more due to structural differences in the wage schedules faced by black and white males.

Suggested Citation

  • Bart Hobijn & Carlos A. Medina-Durango, 2000. "Is Discrimination Due to a Coordination Failure?," Econometric Society World Congress 2000 Contributed Papers 1758, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1758
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