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)
   

Abstract:

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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