The Persistence of Discrimination Under Competition: A Dynamic Search Model with Endogenous Beliefs Working paper -comments welcome

Audrey Etienne ()
Additional contact information
Audrey Etienne: LERN - Laboratoire d'Economie Rouen Normandie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, UNIROUEN - Université de Rouen Normandie - NU - Normandie Université

Working Papers from HAL

Abstract: Does competition eliminate discrimination when employer beliefs about minority productivity are formed through endogenous learning? Not necessarily. I embed Bayesian learning from own-firm hires in a competitive search model with free entry. The discriminatory steady state is the unique equilibrium and is globally stable: non-discriminating entrants face the same informational frictions as incumbents, which bounds their profit advantage and prevents entry from selecting the non-discriminatory outcome. A sharp threshold on signal precision separates two regimes: in the Walrasian limit (nesting Lepage 2024), any positive learning rate suffices for entry to close the gap; under search frictions with positive entry costs, even very precise signals are insufficient. A Shapley decomposition attributes most of the welfare loss to taste discrimination, but it is the information friction that forecloses Beckerian competitive convergence. A temporary hiring mandate generates persistent belief compression with a half-life governed by informational turnover (approximately 7 years), producing opposite predictions from models where mandates operate through biased evaluation criteria or worker investment distortions. Calibrated to U.S. labor market data, the model generates group-B expected income gaps of 6-15%.

Keywords: Discrimination; Competitive Search; Bayesian Learning; Information Frictions; Free Entry; Hiring Mandates (search for similar items in EconPapers)
Date: 2026-04-10
Note: View the original document on HAL open archive server: https://hal.science/hal-05587374v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05587374v1/document (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:hal:wpaper:hal-05587374

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().