Discrimination and Worker Evaluation

Costas Cavounidis and Kevin Lang

No 21612, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a model of self-sustaining discrimination in wages, coupled with higher unemployment and shorter employment duration among blacks. While white workers are hired and retained indefinitely without monitoring, black workers are monitored and fired if a negative signal is received. The fired workers, who return to the pool of job-seekers, lower the average productivity of black job-seekers, perpetuating the cycle of lower wages and discriminatory monitoring. Under suitable parameter values the model has two steady states, one corresponding to each population group. Discrimination can persist even if the productivity of blacks exceeds that of whites.

JEL-codes: J71 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-lma, nep-ltv and nep-ure
Note: LS
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