Job Discrimination, Market Forces and the Invisibility Hypothesis

Paul Milgrom

No 708R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: The Invisibility Hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers, but that promotion enhances visibility and alleviates this problem. Then, at a competitive labor market equilibrium, firms profit by hiding talented disadvantaged workers in low level jobs. Consequently, those workers are paid less on average and promoted less often than others with the same education and ability. As a result of the inefficient and discriminatory wage and promotion policies, disadvantaged workers experience lower returns to investments in human capital than other workers.

Pages: 40 pages
Date: 1984, Revised 1985
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Citations: View citations in EconPapers (9)

Published in Quarterly Journal of Economics (August 1987), 102: 453-476

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Journal Article: Job Discrimination, Market Forces, and the Invisibility Hypothesis (1987)
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