Misperception and informativeness in statistical discrimination

Matteo Escud\'e, Paula Onuchic, Ludvig Sinander and Quitz\'e Valenzuela-Stookey

Papers from arXiv.org

Abstract: We study the interplay of information and prior (mis)perceptions in a Phelps-Aigner-Cain-type model of statistical discrimination in the labor market. We decompose the effect on average pay of an increase in how informative observables are about workers' skill into a non-negative instrumental component, reflecting increased surplus due to better matching of workers with tasks, and a perception-correcting component capturing how extra information diminishes the importance of prior misperceptions about the distribution of skills in the worker population. We sign the perception-correcting term: it is non-negative (non-positive) if the population was ex-ante under-perceived (over-perceived). We then consider the implications for pay gaps between equally-skilled populations that differ in information, perceptions, or both, and identify conditions under which improving information narrows pay gaps.

Date: 2025-08
New Economics Papers: this item is included in nep-lma
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2508.20053 Latest version (application/pdf)

Related works:
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:arx:papers:2508.20053

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().