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Employers' Preference for Discrimination

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  • Sue H. Mialon
  • Seung Han Yoo

Abstract

This paper models employers' preference for discrimination toward ex ante identical groups of workers when the workers must compete for limited positions. Employers benefit from discrimination against minority workers because it can reduce the overall risk from workers' noisy signals as it increases the expected quality of "majority" workers' signals and their chance to win the competition for the limited positions. We show that employers can influence the selection of a discriminatory equilibrium by choosing the set of finalists in competition primarily from a majority group. We discuss the implications of Equal Opportunity Laws in this context.

Suggested Citation

  • Sue H. Mialon & Seung Han Yoo, 2014. "Employers' Preference for Discrimination," Emory Economics 1402, Department of Economics, Emory University (Atlanta).
  • Handle: RePEc:emo:wp2003:1402
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    References listed on IDEAS

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    1. Lawrence E. Blume, 2005. "Learning and Statistical Discrimination," American Economic Review, American Economic Association, vol. 95(2), pages 118-121, May.
    2. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
    3. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
    4. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," American Economic Review, American Economic Association, vol. 95(4), pages 1327-1340, September.
    5. Sue H. Mialon, 2013. "Prejudice and Competitive Signaling," Emory Economics 1313, Department of Economics, Emory University (Atlanta).
    6. Shubham Chaudhuri & Rajiv Sethi, 2008. "Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?," Review of Economic Studies, Oxford University Press, vol. 75(2), pages 579-596.
    7. Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
    8. Klumpp, Tilman & Su, Xuejuan, 2013. "Second-order statistical discrimination," Journal of Public Economics, Elsevier, vol. 97(C), pages 108-116.
    9. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-571, June.
    10. Stiglitz, Joseph E, 1973. "Approaches to the Economics of Discrimination," American Economic Review, American Economic Association, vol. 63(2), pages 287-295, May.
    11. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    12. Fryer, Roland, 2007. "Belief Flipping in a Dynamic Model of Statistical Discrimination," Scholarly Articles 2955768, Harvard University Department of Economics.
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    Cited by:

    1. Sue H. Mialon, 2013. "Prejudice and Competitive Signaling," Emory Economics 1313, Department of Economics, Emory University (Atlanta).

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