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.
|Number of pages
|Journal of Economic Theory and Econometrics
|Published - 2019 Dec
Bibliographical noteFunding 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.
© 2019, Korean Econometric Society. All rights reserved.
- Asymmetric information
- Group inequality
- Statistical discrimination
ASJC Scopus subject areas
- Economics and Econometrics