On discrimination with competition between groups

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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.

Original languageEnglish
Pages (from-to)1-12
Number of pages12
JournalJournal of Economic Theory and Econometrics
Issue number4
Publication statusPublished - 2019 Dec

Bibliographical note

Funding Information:
∗I thank Kaushik Basu, Stephen Coate, Biung-Ghi Ju, and Mukul Majumdar for earlier helpful discussions on this and related topics. I am also grateful to the editor and two anonymous referees for very helpful comments. This research has been supported by a Korea University research grant. Of course, all remaining errors are mine.

Publisher Copyright:
© 2019, Korean Econometric Society. All rights reserved.


  • Asymmetric information
  • Group inequality
  • Statistical discrimination

ASJC Scopus subject areas

  • Economics and Econometrics


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