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Discrimination as a coordination device : markets and the emergence of identity

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  • Basu,Kaushik

Abstract

The paper develops a new theory of group discrimination in which the discrimination in favor or against certain groups is simply a coordination device. It is built on the axiom that a person who gets to perform many tasks is more effective in carrying out each task, which implies increasing returns to productivity in doing the same task or strategic complementarity between doing different tasks. The theory helps us understand discrimination in free markets and the .finding of some empirical studies that show that people discriminate in job markets against certain groups even when all other traits are held constant. The model gives insight into the relation between group size, discrimination, and productivity.

Suggested Citation

  • Basu,Kaushik, 2015. "Discrimination as a coordination device : markets and the emergence of identity," Policy Research Working Paper Series 7490, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7490
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    References listed on IDEAS

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    1. Ashwini Deshpande & Smriti Sharma, 2016. "Disadvantage and discrimination in self-employment: caste gaps in earnings in Indian small businesses," Small Business Economics, Springer, vol. 46(2), pages 325-346, February.
    2. Basu, Kaushik & Weibull, Jorgen W., 1991. "Strategy subsets closed under rational behavior," Economics Letters, Elsevier, vol. 36(2), pages 141-146, June.
    3. Deshpande, Ashwini & Weisskopf, Thomas E., 2014. "Does Affirmative Action Reduce Productivity? A Case Study of the Indian Railways," World Development, Elsevier, vol. 64(C), pages 169-180.
    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.
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    Keywords

    Housing&Human Habitats; Race in Society; Economic Theory&Research; Labor Policies; Markets and Market Access;
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