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Search, Bargaining and Employer Discrimination

Author

Listed:
  • Rosen, A.

Abstract

This paper analyses Becker's (1971) theory of employer discrimination within a search and wage-bargaining setting. Discriminatory firms pay workers who are discriminated against less, and apply stricter hiring-criteria to these workers. It is shown that the highest profits are realized by firms with a positive discrimination coefficient. Moreover, once ownership and control are separated, both highest profits and highest utility may be realized by firms with a positive discrimination coefficient. Thus, market forces, like entry and/or takeovers do not ensure that wage differentials due to employer discrimination will disappear.

Suggested Citation

  • Rosen, A., 1998. "Search, Bargaining and Employer Discrimination," Papers 1998-13, Uppsala - Working Paper Series.
    • Handle: RePEc:fth:uppaal:1998-13
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    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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