Belief Flipping in a Dynamic Model of Statistical Discrimination
The literature on statistical discrimination shows that ex-ante identical groups may be differentially treated in discriminatory equilibria. This paper constructs a dynamic model of statistical discrimination and explores what happens to the individuals who nonetheless overcome the initial discrimination. If an employer discriminates against a group of workers in her initial hiring, she may actually favor the successful members of that group when she promotes from within the firm. The worker's welfare implications (i.e. who benefits from an employer's discriminatory hiring practices) are unclear. Even though agents face discrimination initially, some may be better off because of it.
|Date of creation:||Apr 2006|
|Date of revision:|
|Publication status:||published as Fryer, Ronald G. Jr. "Belief flipping in a dynamic model of statistical discrimination." Journal of Public Economics 91, 5-6 (June 2007): 1151-1166.|
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