IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp1389.html
   My bibliography  Save this paper

Information and Racial Exclusion

Author

Listed:
  • Lundberg, Shelly

    (University of California, Santa Barbara)

  • Startz, Richard

    (University of Washington)

Abstract

This paper presents several economic models that explore the relationships between imperfect information, racial income disparities, and segregation. The use of race as a signal arises here, as in models of statistical discrimination, from imperfect information about the return to transactions with particular agents. In a search framework, signaling supports not simply a discriminatory equilibrium, but a pattern of racially segregated transactions, which in turn perpetuates the informational asymmetries. Minority groups necessarily suffer disproportionately from segregation, since the degree to which transactions opportunities are curtailed depends upon group size, as well as the informational “distance” between racial groups. However, in some variants of the model, minority agents will self-segregate since they face an adverse selection of majority agents who are willing to trade with them. We also show that, if agents are able to learn from transactions, racial signaling can emerge with only minimal assumptions about the ex ante importance of race.

Suggested Citation

  • Lundberg, Shelly & Startz, Richard, 2004. "Information and Racial Exclusion," IZA Discussion Papers 1389, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp1389
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp1389.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Patrick Bayer & Robert McMillan & Kim Rueben, 2004. "Residential Segregation in General Equilibrium," Working Papers 885, Economic Growth Center, Yale University.
    2. Edward P. Lazear, 1999. "Culture and Language," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 95-126, December.
    3. Larry Samuelson & George J. Mailath & Avner Shaked, 2000. "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," American Economic Review, American Economic Association, vol. 90(1), pages 46-72, March.
    4. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
    5. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 313-350.
    6. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    7. Rajiv Sethi & Rohini Somanathan, 2004. "Inequality and Segregation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1296-1321, December.
    8. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    9. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    10. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical Theories of Discrimination in Labor Markets," ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
    11. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anthony Edo & Nicolas Jacquemet & Constantine Yannelis, 2019. "Language skills and homophilous hiring discrimination: Evidence from gender and racially differentiated applications," Review of Economics of the Household, Springer, vol. 17(1), pages 349-376, March.
    2. Houy, Nicolas, 2006. "Exclusion by cognitive limitation," Economics Letters, Elsevier, vol. 90(3), pages 317-320, March.
    3. Borooah, Vani & Myers, Samuel, 2014. "Discriminatory Behaviour: Issues Related to Theory and Measurement," MPRA Paper 75712, University Library of Munich, Germany.
    4. Osiris Jorge, Parcero & Adolfo, Cristobal-Campoamor, 2009. "Dynamics of neighborhood formation and segregation by income," MPRA Paper 16936, University Library of Munich, Germany.
    5. James Fain, 2016. "Screening Discrimination in a Broader Context," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 276-294, October.
    6. Harbaugh, Rick & To, Ted, 2014. "Opportunistic discrimination," European Economic Review, Elsevier, vol. 66(C), pages 192-204.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shelly Lundberg & Richard Startz, 1998. "Race, Information, and Segregation," Discussion Papers in Economics at the University of Washington 0047, Department of Economics at the University of Washington.
    2. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    3. Luojia Hu & Christopher Taber, 2011. "Displacement, Asymmetric Information, and HeterogeneousHuman Capital," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 113-152, January.
    4. Humburg, Martin & van der Velden, Rolf, 2015. "Skills and the graduate recruitment process: Evidence from two discrete choice experiments," Economics of Education Review, Elsevier, vol. 49(C), pages 24-41.
    5. Richard Chisik, 2015. "Job market signalling, stereotype threat and counter‐stereotypical behaviour," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(1), pages 155-188, February.
    6. David Masclet & Emmanuel Peterle & Sophie Larribeau, 2012. "The Role of Information in Deterring Discrimination: A New Experimental Evidence of Statistical Discrimination," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201238, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    7. Morten Størling Hedegaard & Jean-Robert Tyran, 2018. "The Price of Prejudice," American Economic Journal: Applied Economics, American Economic Association, vol. 10(1), pages 40-63, January.
    8. Arcidiacono, Peter, 2003. "The dynamic implications of search discrimination," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1681-1706, August.
    9. Kevin Lang & Michael Manove, 2011. "Education and Labor Market Discrimination," American Economic Review, American Economic Association, vol. 101(4), pages 1467-1496, June.
    10. repec:cpr:ceprdp:9179 is not listed on IDEAS
    11. Ilan Tojerow, 2008. "Industry Wage Differentials Rent Sharing and Gender in Belgium," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(3), pages 55-65.
    12. Humburg, M. & van der Velden, R.K.W., 2014. "Skills and the graduate recruitment process: Evidence from two discrete choice experiments," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    13. Flage, Alexandre, 2018. "Ethnic and gender discrimination in the rental housing market: Evidence from a meta-analysis of correspondence tests, 2006–2017," Journal of Housing Economics, Elsevier, vol. 41(C), pages 251-273.
    14. Levitt, Steven D, 2004. "Testing Theories of Discrimination: Evidence from Weakest Link," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 431-452, October.
    15. J. Aislinn Bohren & Alex Imas & Michael Rosenberg, 2019. "The Dynamics of Discrimination: Theory and Evidence," American Economic Review, American Economic Association, vol. 109(10), pages 3395-3436, October.
    16. Rajesh Ramachandran & Christopher Rauh, 2018. "Discrimination without taste: how discrimination can spillover and persist," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(3), pages 249-274, August.
    17. Luojia Hu & Christopher Taber, 2005. "Layoffs, Lemons, Race, and Gender," NBER Working Papers 11481, National Bureau of Economic Research, Inc.
    18. Bøg, Martin & Kranendonk, Erik, 2011. "Labor market discrimination of minorities? yes, but not in job offers," MPRA Paper 33332, University Library of Munich, Germany.
    19. repec:eee:labchp:v:1:y:1986:i:c:p:693-785 is not listed on IDEAS
    20. Anwar, Shamena, 2012. "Testing for discrimination: Evidence from the game show Street Smarts," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 268-285.
    21. Lundberg, S.J. & Startz, R., 1996. "Inequality and Race: Models and Policy," Discussion Papers in Economics at the University of Washington 96-04, Department of Economics at the University of Washington.
    22. Grossman, Shelby & Honig, Dan, 2017. "Evidence from Lagos on Discrimination across Ethnic and Class Identities in Informal Trade," World Development, Elsevier, vol. 96(C), pages 520-528.

    More about this item

    Keywords

    imperfect information; discrimination; segregation; race; search;
    All these keywords.

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp1389. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.