Abstract
This paper models employers’ incentives for discrimination against ex ante identical groups of workers when the workers must compete for a limited number of positions. Employers benefit from discrimination against minority workers because it can reduce the overall risk from workers’ noisy signals by increasing the expected quality of “majority” workers and their chance to win the competition for the limited number of positions. We show that employers can influence the selection of a discriminatory equilibrium by choosing the set of finalists in competition primarily from a majority group, and favoring them when the two groups are equally qualified. We discuss the implications of equal opportunity laws in this context.
| Original language | English |
|---|---|
| Pages (from-to) | 141-160 |
| Number of pages | 20 |
| Journal | Journal of Economic Behavior and Organization |
| Volume | 136 |
| DOIs | |
| Publication status | Published - 2017 Apr 1 |
Keywords
- Asymmetric information
- Cross-group risks
- Group inequality
- Statistical discrimination
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management
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Cite this
Mialon, S. H., & Yoo, S. H. (2017). Incentives for discrimination. Journal of Economic Behavior and Organization, 136, 141-160. https://doi.org/10.1016/j.jebo.2017.01.021