Discrimination and Worker Evaluation

50 Pages Posted: 6 Oct 2015

See all articles by Costas Cavounidis

Costas Cavounidis

Boston University

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2015

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.

Suggested Citation

Cavounidis, Costas and Lang, Kevin, Discrimination and Worker Evaluation (October 2015). NBER Working Paper No. w21612. Available at SSRN: https://ssrn.com/abstract=2669801

Costas Cavounidis (Contact Author)

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Kevin Lang

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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