Identification, screening and stereotyping in labour market discrimination |
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Authors: | Maarten C M Vendrik Christiane Schwieren |
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Institution: | 1. Maastricht University, P. O. Box 616, 6200 MD, Maastricht, The Netherlands 2. IZA, Bonn, Germany 3. University of Heidelberg, Heidelberg, Germany
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Abstract: | According to social-psychological research, feelings of uncertainty in decision-making evoke two opposite responses: (i) reduction
of uncertainty by information search, leading to less stereotyping of people, and hence less discrimination; (ii) social identification
with an ingroup, inducing more reliance on stereotypic perceptions and prejudices, and hence more discrimination against an
outgroup. We integrate both responses in a microeconomic model of hiring and pay decisions by an employer. Increasing competition
in the product market makes the employer feel more uncertain about his profits, but also raises the opportunity cost of screening
expenditures. This elicits substitution of ingroup identification for screening expenditures, and hence enhances discrimination. |
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