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The Dynamics of Statistical Discrimination

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  • Lawrence E. Blume

Abstract

This article demonstrates how learning dynamics select among equilibria in a statistical discrimination model of employment. The static market model exhibits multiple equilibria. The belief revision dynamics generate a Markov market process which, in the long run, is mostly near one and only one of the static equilibria, regardless of initial conditions. Usually policy effects appear in comparative statics, where the equilibrium set moves with different policies. But here policy is also seen to effect which equilibrium is selected even when it has no comparative statics effect at all. Copyright 2006 The Author(s). Journal compilation Royal Economic Society 2006.

Suggested Citation

  • Lawrence E. Blume, 2006. "The Dynamics of Statistical Discrimination," Economic Journal, Royal Economic Society, vol. 116(515), pages 480-498, November.
    • Handle: RePEc:ecj:econjl:v:116:y:2006:i:515:p:f480-f498
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    1. repec:cep:stieop:56 is not listed on IDEAS
    2. Levin Jonathan, 2009. "The Dynamics of Collective Reputation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-25, August.
    3. Bruno Borger & Amihai Glazer, 2016. "Signaling, network externalities, and subsidies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 798-811, October.
    4. Alessandra Bonfiglioli & Gino Gancia, 2019. "Heterogeneity, selection and labor market disparities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 305-325, January.
    5. Rangel, Marcos & Marotta, Luana & van der Werf, Cynthia & Duryea, Suzanne & Drouet Arias, Marcelo & Rodríguez Guillén, Lucina, 2024. "Barriers to Immigrant Assimilation: Evidence on Grading Bias in Ecuadorian High Schools," IDB Publications (Working Papers) 13434, Inter-American Development Bank.
    6. Kim, Young-Chul & Loury, Glenn, 2012. "Collective Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 54950, University Library of Munich, Germany, revised 31 Mar 2014.
    7. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
    8. Guo Xu, 2015. "How Does Collective Reputation Affect Hiring? Selection and Sorting in an Online Labour Market," STICERD - Economic Organisation and Public Policy Discussion Papers Series 056, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    9. Natalia Lazzati & Amilcar A. Menichini, 2016. "Hot Spot Policing: A Study of Place‐Based Strategies for Crime Prevention," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 893-913, January.

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