A General Equilibrium Model of Statistical Discrimination

SSRI Working Paper No. 2001-04

42 Pages Posted: 15 May 2001

See all articles by Peter Norman

Peter Norman

University of British Columbia - Department of Economics

Andrea Moro

Vanderbilt University - College of Arts and Science - Department of Economics

Date Written: March 31, 2001

Abstract

We consider a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated differently in equilibrium due to informational externalities. Unlike earlier models of statistical discrimination, group inequalities may arise even if the corresponding model with a single group has a unique equilibrium. The dominant group gains from discrimination, rationalizing why a majority may be reluctant to eliminate discrimination. The model is also consistent with "reverse discrimination" as a remedy against discrimination since it may require to decrease the welfare of the dominant group to achieve parity.

Keywords: Statistical Discrimination, General equilibrium, Asymmetric Information, Human Capital

JEL Classification: D58, D62, D82, J41, J71

Suggested Citation

Norman, Peter and Moro, Andrea, A General Equilibrium Model of Statistical Discrimination (March 31, 2001). SSRI Working Paper No. 2001-04, Available at SSRN: https://ssrn.com/abstract=268681 or http://dx.doi.org/10.2139/ssrn.268681

Peter Norman (Contact Author)

University of British Columbia - Department of Economics ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z2
Canada
(604) 822-2839 (Phone)

HOME PAGE: http://faculty.arts.ubc.ca/pnorman/

Andrea Moro

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States

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