Discrimination, technology and unemployment

Luca Merlino

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Abstract: I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.

Keywords: Discrimination; Pre-matching investment; Directed search; Unemployment (search for similar items in EconPapers)
Date: 2012-08
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Citations: View citations in EconPapers (11)

Published in Labour Economics, 2012, 19 (4), ⟨10.1016/j.labeco.2012.05.006⟩

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Journal Article: Discrimination, technology and unemployment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01263757

DOI: 10.1016/j.labeco.2012.05.006

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