Discrimination and Workers' Expectations

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 05.04.2005, 12:15 - 13:30


Presentation by 

Antonio Filippin (University of Milan)


The paper explores the role of workers’ expectations as an original explanation for the puzzling long run persistence of observed discrimination against some minorities in the labor market. A game of incomplete information is presented, showing that ex ante identical groups of workers may be characterized by unequal outcomes in equilibrium due to their different beliefs, even though discriminatory tastes have disappeared. Wrong beliefs of being discriminated against are self-confirming in this circumstance, being the ultimate cause of a lower percentage of promotions which supports these wrong beliefs. Unequal outcomes are rationalized by employers with a statistical discrimination argument, which however does not have behavioral implications and therefore does not affect the distribution of promotions. Unequal outcomes may also be rationalized by majority workers via self-serving beliefs about the distribution of ability across populations. Unequal outcomes driven by workers’ expectations turn out to be robust to trial work periods and to affirmative actions like quotas.

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