Strategic gains from discrimination
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Strategic gains from discrimination. / Lagerlöf, Johan N. M.
I: European Economic Review, Bind 122, 103354, 02.2020.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Strategic gains from discrimination
AU - Lagerlöf, Johan N. M.
PY - 2020/2
Y1 - 2020/2
N2 - According to a classical argument, an employer handicaps herself if basing hiring decisions on factors unrelated to productivity; therefore, discrimination is undermined by competition. This paper, in contrast, argues that being discriminatory can be a commitment device that helps an employer and its rivals to partially segment the labor market, which leads to lower wages and higher profits. Discrimination can thus be an endogenous response to competition. Indeed, the relationship between discrimination and competition can be nonmonotone. Moreover, the logic suggests that a ban on wage discrimination may instead lead to discrimination in hiring. (C) 2019 Elsevier B.V. All rights reserved.
AB - According to a classical argument, an employer handicaps herself if basing hiring decisions on factors unrelated to productivity; therefore, discrimination is undermined by competition. This paper, in contrast, argues that being discriminatory can be a commitment device that helps an employer and its rivals to partially segment the labor market, which leads to lower wages and higher profits. Discrimination can thus be an endogenous response to competition. Indeed, the relationship between discrimination and competition can be nonmonotone. Moreover, the logic suggests that a ban on wage discrimination may instead lead to discrimination in hiring. (C) 2019 Elsevier B.V. All rights reserved.
KW - Discrimination
KW - Competition
KW - Strategic interaction
KW - Market segmentation
KW - SEGMENTATION
KW - DELEGATION
KW - STABILITY
U2 - 10.1016/j.euroecorev.2019.103354
DO - 10.1016/j.euroecorev.2019.103354
M3 - Journal article
VL - 122
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
M1 - 103354
ER -
ID: 255107752