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A Theory of Group Inequality

  • Seung Han Yoo

    ()

    (Department of Economics, Korea University, Seoul, Republic of Korea)

This paper offers a model in which there is direct competition between different groups. We deliberately endow an environment with many employers and workers in which opportunities are limited such that each employer is randomly matched with two workers from the entire worker population, which consists of two ex ante identical sub-groups, and selects at most one of them. We show that with the competition, a set of feasible equilibria has a con.ict structure unlike the conflict-free structure found in typical statistical discrimination models, and that we can find employers' strategy such that employers benefit from discrimination, and this strategy can be sustained as a collusion between employers and an advantaged group in a repeated game.

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File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1309.pdf
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Paper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number 1309.

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Date of creation: 2013
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Handle: RePEc:iek:wpaper:1309
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  1. Maskin, Eric & Kreps, David & Fudenberg, Drew, 1990. "Repeated Games with Long-run and Short-run Players," Scholarly Articles 3226950, Harvard University Department of Economics.
  2. Galor, Oded & Moav, Omer, 1999. "From Physical to Human Capital Accumulation: Inequality in the Process of Development," CEPR Discussion Papers 2307, C.E.P.R. Discussion Papers.
  3. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162.
  4. George J. Mailath & Larry Samuelson & Avner Shaked, . ""Endogenous Inequality in Integrated Labor Markets with Two-sided Search''," CARESS Working Papres 98-06, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  5. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  6. Stiglitz, Joseph E, 1973. "Approaches to the Economics of Discrimination," American Economic Review, American Economic Association, vol. 63(2), pages 287-95, May.
  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. Lawrence E. Blume, 2005. "Learning and Statistical Discrimination," American Economic Review, American Economic Association, vol. 95(2), pages 118-121, May.
  9. 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.
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