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Labour Market Performance Effects of Discrimination and Loss of Skill

Author

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  • Larsen, Birthe

    () (Department of Economics, Copenhagen Business School)

  • Waisman, Gisela

    (Regeringskansliet, Stockholm)

Abstract

We examine the impact of discrimination on labour market performance when workers are subject to a risk of losing skills during an unemployment experience. Within a search and matching framework, we show that both natives and immigrants are affected by discrimination. Discrimination in one sector has positive spill-overs, inducing employment to increase in the other sector and the effect on labour market performance therefore depends on whether discrimination is present in only one sector or in both sectors. Discrimination may induce workers to train more or less than natives after having lost their skills, dependent upon which sector there is discrimination. Net output tends to the be most negatively affected by discrimination among high-skilled workers

Suggested Citation

  • Larsen, Birthe & Waisman, Gisela, 2015. "Labour Market Performance Effects of Discrimination and Loss of Skill," Working Papers 02-2015, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2015_002
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    References listed on IDEAS

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    1. Audra J. Bowlus & Zvi Eckstein, 2002. "Discrimination and Skill Differences in an Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1309-1345, November.
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    16. Gisela Waisman & Birthe Larsen, 2016. "Income, amenities and negative attitudes," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-32, December.
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    Cited by:

    1. repec:eee:labeco:v:49:y:2017:i:c:p:106-127 is not listed on IDEAS
    2. Borowczyk-Martins, Daniel & Bradley, Jake & Tarasonis, Linas, 2018. "Racial discrimination in the U.S. labor market: Employment and wage differentials by skill," Labour Economics, Elsevier, vol. 50(C), pages 45-66.
    3. Gisela Waisman & Birthe Larsen, 2016. "Income, amenities and negative attitudes," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-32, December.

    More about this item

    Keywords

    discrimination; unemployment; search and matching; wages;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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