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Discrimination Without Taste - How Discrimination Can Spillover and Persist

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  • Rajesh RAMACHANDRAN
  • Christopher RAUH

Abstract

We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a channel of discrimination in productive activities requiring the input of multiple agents. We show that discrimination can persist under perfectly observable ability, when taste for discrimination has died out, and under absence of discriminatory social norms. Empirically we analyze the market for self-employment - an activity commonly requiring inputs from multiple agents. Consistent with the theoretical predictions, beliefs about discrimination are a significant correlate of self-employment rates, as well as the cost and success of establishing productive relations for blacks in the US.

Suggested Citation

  • Rajesh RAMACHANDRAN & Christopher RAUH, 2018. "Discrimination Without Taste - How Discrimination Can Spillover and Persist," Cahiers de recherche 09-2018, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  • Handle: RePEc:mtl:montec:09-2018
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    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. repec:eee:gamebe:v:107:y:2018:i:c:p:238-252 is not listed on IDEAS
    3. Vessela Daskalova, 2016. "Discrimination, Social Identity, and Coordination: An Experiment," Cambridge Working Papers in Economics 1555, Faculty of Economics, University of Cambridge.
    4. Dewan, Torun & Wolton, Stephane, 2019. "A Political Economy of Social Discrimination," MPRA Paper 94394, University Library of Munich, Germany.

    More about this item

    Keywords

    discrimination; coordination failure; beliefs; inequality;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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