Group Reputation and the Endogenous Group Formation

41 Pages Posted: 13 Nov 2009 Last revised: 1 Apr 2014

See all articles by Glenn C. Loury

Glenn C. Loury

Brown University - Department of Economics; Brown University - Watson Institute for International and Public Affairs

Young-Chul Kim

Sogang University

Date Written: May 13, 2009

Abstract

We develop a dynamic model that can explain identity switching activities among a stereotyped population, such as passing and selective out-migration, based on the group reputation model developed in Kim and Loury (2008). The more talented members of the population, who gain more by separating themselves from the masses, have a greater incentive to pass for an advantaged group with a higher collective reputation (incurring some cost of switching) or differentiate themselves by adopting the cultural traits of a better-off subgroup to send signals of their higher productivity to employers. We also show how an elite subgroup may grow autonomously out of the stereotyped population, when the most talented members adopt the cultural indices that are not affordable to other members of the population. Those cultural traits or indices are not necessarily relevant for productivity, but should be observable so that they can supplement the imperfect information about the workers' true productivity, as discussed in Fang (2001). We plan to merge this development with our previous work in Kim and Loury (2008) in the future.

Keywords: Endogenous Group Formation, Passing, Partial Passing, Social Elite, Group Reputation, Statistical Discrimination

JEL Classification: D63, J15, J70, H00

Suggested Citation

Loury, Glenn C. and Kim, Young-Chul, Group Reputation and the Endogenous Group Formation (May 13, 2009). Available at SSRN: https://ssrn.com/abstract=1504602 or http://dx.doi.org/10.2139/ssrn.1504602

Glenn C. Loury

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Brown University - Watson Institute for International and Public Affairs ( email )

111 Thayer Street
Box 1970
Providence, RI 02912-1970
United States

Young-Chul Kim (Contact Author)

Sogang University ( email )

Seoul 121-742
Korea, Republic of (South Korea)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
55
Abstract Views
713
Rank
667,636
PlumX Metrics