Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

On Discrimination with Competition between Groups

Vol.30, No.4, December , 1–12



  •   (Korea University)

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Abstract  

Statistical discrimination explains that two ex ante identical groups can have two different qualifications due to asymmetric information and self-fulfilling equilibria. In the typical statistical discrimination models, however, there is no interaction between groups. This paper offers a statistical discrimination model with a continuous signaling in which two groups compete for employment. We compare exclusive equilibria, in which no worker in one group makes a human capital investment, with symmetric equilibria, and show that discrimination as well as non-discrimination can be Pareto optimal under a certain environment.


Keywords
   Statistical Discrimination, Group Inequality, Asymmetric Information

JEL classification codes
   D63, D82, J71
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