Ethnic Competition and Specialization
36 Pages Posted: 30 Nov 2007
Date Written: November 2007
Are ethnic specialization and thus a downward sloping labor demand curve fundamental features of labor market competition between ethnic groups? In a general equilibrium model, this paper argues that spillover effects in skill acquisition and social distances between ethnic groups engender equilibrium regimes of skill acquisition that differ in their implications for ethnic specialization. Specifically, fundamental relationships through which relative group sizes determine whether ethnic specialization arises and in what degree are established. Thus, this paper theoretically justifies a downward sloping labor demand curve and explains why some ethnic groups earn more than others, ethnic minorities underperforming or outperforming majorities.
Keywords: human capital, ethnic group, labor market, ethnic specialization, spillover effects
JEL Classification: J15, J24, J70, O15
Suggested Citation: Suggested Citation