Which Wage Distributions are Consistent with Statistical Discrimination?

Rahul Deb and Ludovic Renou

No 17676, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We derive a non-parametric test for statistical discrimination that can be applied to cross-sectional wage data. Specifically, we show that the wage distributions for two groups (with identical observable characteristics) are consistent with a general reduced-form model of statistical discrimination if, and only if, neither wage distribution first-order stochastically dominates the other. Our model allows us to interpret a rejection of this condition as evidence of bias.

Date: 2022-11
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Working Paper: Which wage distributions are consistent with statistical discrimination? (2022)
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