A Characterisation of ‘Phelpsian’ Statistical Discrimination

Christopher Chambers and Federico Echenique

The Economic Journal, 2021, vol. 131, issue 637, 2018-2032

Abstract: We establish that a type of statistical discrimination—that based on informativeness of signals about workers’ skills and the ability appropriately to match workers to tasks—is possible if and only if it is impossible uniquely to identify the signal structure observed by an employer from a realised empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent, remuneration for workers. Finally, we connect the statistical discrimination literature to Bayesian persuasion, establishing that if discrimination is absent, then the optimal signalling problem results in a linear pay-off function (as well as a kind of converse).

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/ej/ueaa107 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: A characterization of "Phelpsian" statistical discrimination (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:131:y:2021:i:637:p:2018-2032.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Economic Journal is currently edited by Francesco Lippi

More articles in The Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press () and ().