Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?

We introduce peer effects in the costs of human capital acquisition into a model of statistical discrimination in labour markets. This creates a link between the level of segregation in social networks and racial disparities in job assignment and wages. We show that this relationship is characterize...

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Main Authors:	Chaudhuri, Shubham, Sethi, Rajiv
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Labor Demand J230 Human Capital Skills Occupational Choice Labor Productivity J240 Wage Level and Structure Wage Differentials J310 Labor Discrimination J710
Online Access:	http://hdl.handle.net/10986/5509

id	okr-10986-5509
recordtype	oai_dc
spelling	okr-10986-55092021-04-23T14:02:22Z Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes? Chaudhuri, Shubham Sethi, Rajiv Labor Demand J230 Human Capital Skills Occupational Choice Labor Productivity J240 Wage Level and Structure Wage Differentials J310 Labor Discrimination J710 We introduce peer effects in the costs of human capital acquisition into a model of statistical discrimination in labour markets. This creates a link between the level of segregation in social networks and racial disparities in job assignment and wages. We show that this relationship is characterized by discontinuities: there is a threshold level of segregation below which negative stereotypes become unsustainable, and steady-state skill levels can change dramatically. This change can work in either direction: skill levels may either rise or fall in both groups. Which of these outcomes arises depends on the population share of the disadvantaged group and on the distribution of the costs of human capital investments. We also examine the effects of affirmative action policies in the presence of peer effects and provide conditions under which such policies eliminate negative stereotypes. 2012-03-30T07:33:10Z 2012-03-30T07:33:10Z 2008 Journal Article Review of Economic Studies 00346527 http://hdl.handle.net/10986/5509 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Labor Demand J230 Human Capital Skills Occupational Choice Labor Productivity J240 Wage Level and Structure Wage Differentials J310 Labor Discrimination J710
spellingShingle	Labor Demand J230 Human Capital Skills Occupational Choice Labor Productivity J240 Wage Level and Structure Wage Differentials J310 Labor Discrimination J710 Chaudhuri, Shubham Sethi, Rajiv Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	We introduce peer effects in the costs of human capital acquisition into a model of statistical discrimination in labour markets. This creates a link between the level of segregation in social networks and racial disparities in job assignment and wages. We show that this relationship is characterized by discontinuities: there is a threshold level of segregation below which negative stereotypes become unsustainable, and steady-state skill levels can change dramatically. This change can work in either direction: skill levels may either rise or fall in both groups. Which of these outcomes arises depends on the population share of the disadvantaged group and on the distribution of the costs of human capital investments. We also examine the effects of affirmative action policies in the presence of peer effects and provide conditions under which such policies eliminate negative stereotypes.
format	Journal Article
author	Chaudhuri, Shubham Sethi, Rajiv
author_facet	Chaudhuri, Shubham Sethi, Rajiv
author_sort	Chaudhuri, Shubham
title	Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
title_short	Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
title_full	Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
title_fullStr	Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
title_full_unstemmed	Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?
title_sort	statistical discrimination with peer effects: can integration eliminate negative stereotypes?
publishDate	2012
url	http://hdl.handle.net/10986/5509
_version_	1764395303462502400

Statistical Discrimination with Peer Effects: Can Integration Eliminate Negative Stereotypes?

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