Ethnic Competition and Specialization

36 Pages Posted: 30 Nov 2007

See all articles by Martin Kahanec

Martin Kahanec

IZA Institute of Labor Economics; Central European University; Central European Labour Studies Institute

Date Written: November 2007

Abstract

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

Kahanec, Martin, Ethnic Competition and Specialization (November 2007). IZA Discussion Paper No. 3167. Available at SSRN: https://ssrn.com/abstract=1037401

Martin Kahanec (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Central European University ( email )

Nador utca 9
Budapest, H-1051
Hungary

Central European Labour Studies Institute ( email )

Zvolenská 29
Bratislava, 82109
Slovakia

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