Discrimination with Self-Selection

Posted: 12 Apr 1996

See all articles by Jonathan Berk

Jonathan Berk

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Date Written: January 1995

Abstract

This paper studies the effect of employee job selection in a model of statistical discrimination in a competitive market. In an economy in which there are quality differences between groups, the conditions under which all members of one group suffer from discrimination turn out to be surprisingly strong. In general it is quite possible that for certain jobs the discrimination can favor the group that is, on average, worse qualified, while for other jobs it favors the group that is, on average, better qualified. In addition, because of the self-selection bias induced by competition, in many cases the resulting discrimination will be very small when compared to the magnitude of the underlying quality differences between groups. We also show that in cases in which the discrimination results because employers' ability to measure qualifications differs from one group to another, the conditions under which all members of one group suffer from discrimination are much weaker. In general, the group employers know least about is always favored. The economic impact of discrimination that is derived from quality differences between groups is shown to be quite different to the economic impact of discrimination that derives from differences in employer familiarity between groups. The paper concludes by considering some of the policy implications of the results.

JEL Classification: J71, J78, D83

Suggested Citation

Berk, Jonathan B., Discrimination with Self-Selection (January 1995). Available at SSRN: https://ssrn.com/abstract=3063

Jonathan B. Berk (Contact Author)

Stanford Graduate School of Business ( email )

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Stanford, CA 94305-5015
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National Bureau of Economic Research (NBER)

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