does working from home work evidence from a chinese experiment about 10 of us employees now regularly work from home wfh but there are concerns this can lead to shirking from home we report the results of a wfh experiment at ctrip a 16 000 employee nasdaq listed chinese travel agency call center employees who volunteered to wfh were randomly assigned to work from home or in the office for 9 months home working led to a 13 performance increase of which about 9 was from working more minutes per shift fewer breaks and sick days and 4 from more calls per minute attributed to a quieter working environment home workers also reported improved work satisfaction and experienced less turnover but their promotion rate conditional on performance fell due to the success of the experiment ctrip rolled out the option to wfh to the whole firm and allowed the experimental employees to re select between the home or office interestingly over half of them switched which led to the gains from wfh almost doubling to 22 this highlights the benefits of learning and selection effects when adopting modern management practices like wfh

statistical discrimination and the early career evolution of the black white wage gap this article develops and tests a simple dynamic model of statistical discrimination the model improves on earlier static models both by allowing ex ante uncertainty about worker productivity to be resolved as on the job performance is observed and by generating several testable empirical implications these predictions are tested using a sample of young men from the national longitudinal survey of youth producing mixed evidence for the model the main empirical result is that no black white wage gap exists at labor force entry but that one develops as experience accumulates mainly because blacks reap smaller gains from job mobility

anticipated discrimination choices and performance experimental evidence abstract this paper studies experimentally whether potential perceived discrimination affects decisions in a labor market setting with different stereotypes participants are assigned to a seven person group and randomly allocated a role as a firm or worker in each group there are five workers and two firms the only information firms have about each worker is a self selected avatar male female or neutral representing a worker s gender each firm then decides which worker to hire female workers react to potential discrimination when they know the task is math related but not otherwise men choose similar avatar patterns regardless of the task men do perform at much higher levels in the math related task but there is no difference in performance in the emotion recognition task where there is a strong female stereotype

discretion in hiring job testing technologies enable firms to rely less on human judgement when making hiring decisions placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers we study the introduction of job testing across 15 firms employing low skilled service sector workers when faced with similar applicant pools we find that managers who appear to hire against test recommendations end up with worse average hires this suggests that managers often overrule test recommendations because they are biased or mistaken not because they have superior private information the firms in our setting may therefore be able to improve outcomes of hires by limiting managerial discretion and relying more on test recommendations

experience tenure and wage growth of young black and white men this paper studies the source of differences in wage growth between young black and white workers focusing on terminal high school graduates from the national longitudinal survey of youth we estimate the returns to on the job tenure and general labor market experience using ordinary least squares altonji and shakotko and topel estimators results from all three estimators indicate that returns to general experience for black workers trail those for white workers but that black workers earn equal if not higher returns to tenure than do white workers

racial discrimination in the labor market theory and empirics we review theories of race discrimination in the labor market taste based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread but no existing model explains the unemployment rate differential models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment at their current state of development models of statistical discrimination based on rational stereotypes have little empirical content it is plausible that models combining elements of the search models with statistical discrimination could fit the data we suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy jel j15 j31 j64 j71

racial disparities in job finding and offered wages abstractthe extent to which discrimination can explain racial wage gaps is one of the most divisive issues in the social sciences using a newly available data set this paper develops a simple empirical test that under plausible but not innocuous conditions provides a lower bound on the extent of discrimination in the labor market taken at face value our estimates imply that differential treatment accounts for at least one third of the black white wage gap we argue that the patterns in our data are most naturally rationalized through a search matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers but learn about their marginal product over time

the impact of subsidies on x efficiency in ldc industry theory and an empirical test the x inefficiency costs of protection and industrial concentration have been topics of considerable interest in the literature on economic development balassa 1975 and bergsman 1974 for example have argued that protection by increasing x inefficiency generates a major welfare cost which is not captured by traditional costs of protection calculations and white 1976 has examined the relationship between inappropriate factor intensities which he associates with xinefficiency and industrial concentration the common theme which emerges from each of these studies is that public policy can have a major impact on economic performance not only by influencing factor proportions but also by influencing the intensity with which a non measurable input x efficiency is employed despite the intuitive appeal of the x efficiency concept there have been very few empirical tests of this hypothesis this partly reflects the imprecise nature of the basic concept but also the lack of adequate micro economic data x efficiency clearly relates to efficiency within firms so that the most appropriate tests would rely on data on firm level efficiency in this paper we propose a direct test of the x efficiency hypothesis using firm level data we build on previous work by corden 1970 1974 and martin 1978 who showed how to model x efficiency effects using the concept of managerial leisure we extend these simple models of managerial behavior emphasizing the role of the external managerial labor market the model is then used to explore the relationship between changes in public policy managerial effort and x inefficiency certain predictions of the model are tested using cross section data from a survey of firms in two subsidized industries in ghana efficiency indices are computed on the basis of a translog frontier production function variations in relative efficiency are then correlated with several explanatory variables including the presence or absence of subsidy payments to the firm subsidized firms in both industries are found to exhibit higher relative levels of x inefficiency

gender differences in training capital and wages this paper constructs an equilibrium job matching model where workers differ in their attachment to the labor force the model predicts that workers with weaker attachment to the labor market will receive lower starting wages and lower post training wages and will be placed in jobs that offer less training and use less capital the implications of the model for gender differences in pay and job assignment are tested with the eopp data set ourfindings suggest that while training intensity during the first three months of employment is similar in positions filled by males and females females are employed in positions that have a shorter duration of on the job training and that use less capital these differences in on the job training and capital in positions filled by men and women as well as a lower market value for women s prior labor market experience account for a substantial part of the gap in wages between males and females

counteroffers and efficiency in labor markets with asymmetric information this article considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker s productivity than potential employers previous research found that when current employers have better information than potential employers the latter use job assignment to infer an employed worker s qualifications as a result assignment of workers to jobs is inefficient i find that when current employers can match outside offers the equilibrium outcome may be efficient i analyze the effect of the asymmetric information on investment in human capital made by employers and workers and find these investment levels to be first best

job market signalling stereotype threat and counter stereotypical behaviour i introduce stereotype threat in a multiple productivity signalling model existence of multiple self fulfilling stereotypes which can generate statistical discrimination is more likely if there is less variance in the ability distribution a low endogenously correct stereotype about a group forces higher ability group members to choose a higher productivity and a higher separating signal thereby engaging in counter stereotypical behaviour this counter stereotypical behaviour causes the remaining partially pooling group to have lower average productivity reinforcing the negative stereotype the co existence of stereotype threat and counter stereotypical behaviour can explain the simultaneity of lower wages and higher education attainment in a group facing labour market discrimination resume signaux sur le marche du travail menace de stereotype et comportement contre stereotype l auteur introduit une menace de stereotype dans un modele de signalisation des multiples productivites l existence de multiples stereotypes porteurs d autorealisation qui peuvent engendrer la discrimination statistique est davantage vraisemblable s il y a moins de variance dans la repartition des habiletes un stereotype depreciatif endogenement correct a propos d un groupe force les membres du groupe a hautes habiletes a choisir des signaux de haute productivite et qui les separent grandement et donc a s engager dans des comportements contre stereotypiques ce comportement contre stereotypique entraine une productivite moyenne plus faible pour le reste du groupe partiellement agrege ce qui renforce le stereotype negatif la coexistence de menace de stereotype et de comportement contre stereotypique peut expliquer la simultaneite de salaires plus bas et de statut educationnel plus eleve dans un groupe faisant face a la discrimination dans le marche du travail

prelude to macroeconomics two schools of macroeconomic thought compete today the keynesian school attempts to analyze each sector of the economy using the usual tools of optimizing models but produces general equilibrium descriptions of a macroeconomy which are rarely pareto efficient for this reason economists question the internal consistency of keynesian models in contrast the neoclassical or rational expectations school maintains consistency with the principles of perfect competition and flexible prices in essence the neoclassicists macroeconomy behaves as an arrow debreu general equilibrium once this is understood we realize that the economy is pareto efficient though this does not preclude occasional ex post bad draws government policy can be expected to be either neutral or damaging in fairness i am describing polar cases of the keynesian and neoclassical view nearly all economists are extraordinarily prejudiced in favor of models exhibiting rational behavior as am i and the last decade has seen an almost complete intellectual victory for the neoclassical school complete victory has been elusive for a single reason in apparent ignorance of the intellectual arguments of the neoclassical school the economy persists in behaving pretty much as the modern keynesian models predict as premier examples neither the great depression nor the recent massive recession was in my opinion a pareto efficient equilibrium the model i present below rigorously adheres to the rule that agents should follow rational principles in this paper that rule means that agents equate marginal rates of substitution to relative prices at the same time i insert a single piece of imperfect information which prevents the formation of a complete arrow debreu general equilibrium the model predicts qualitative behavior of gnp and employment which is analogous to keynesian predictions government spending is shown to increase gnp and economic welfare the substantive results of the paper appear in the next three sections section i presents the role of imperfect information in the labor market and then goes on to solve for general equilibrium in the absence of government intervention section ii examines the keynesian like behavior of this equilibrium section iii examines the impact on gnp aggregate labor supply and welfare of balanced budget government spending the model produces four major results 1 aggregate spending and labor supply decisions are not simply the sum of individual decisions the model identifies the logical error that paul samuelson has labeled the fallacy of composition 2 say s law fails a unit increase in aggregate supply produces a less than unit increase in demand for output 3 an increase in government spending increases gnp and reduces unemployment 4 an increase in government spending can generate a pareto improvement in individual utility the last section of the paper discusses some of the ways this model differs from the way we usually think about the economy while the paper develops a particular model of aggregate demand its real goal is to demonstrate a general principle once the right set of mathematics is put together it is easy to produce a model of the economy which is at once rational and keynesian in the specific setting i present all the results fol department of economics university of washington seattle wa 98195 the first version of this paper was written while visiting at the graduate school of business stanford university the final version was written while a member of the finance department university of pennsylvania shelly lundberg deserves many thanks for extensive aid and partial absolution from any remaining errors stanley fischer mark flannery robert solow a number of other friends and colleagues and two anonymous referees all contributed valuable constructive criticism for which i am most grateful

mommy tracks and public policy on self fulfilling prophecies and gender gaps in hiring and promotion abstract consider a model with two types of jobs the profitability of hiring a worker to a fast track job depends not only on his or her observable talent but also on incontractible effort we investigate whether self fulfilling expectations may lead to higher hiring or promotion standards for women if employers expect women to do more household work than men thereby exerting less effort in their paid job then women must be more talented to make it profitable to hire them specialization in the family will then result in women doing most of the household work such self fulfilling prophecies can be defeated by affirmative action or family policy however it is unlikely that temporary policy can move the economy to a symmetric equilibrium policy must be made permanent anti discrimination policy need not enhance efficiency and from a distribution viewpoint this is a policy with both winners and losers

taste based or statistical discrimination the economics of discrimination returns to its roots we briefly review the evolution of empirical work on discrimination we discuss why traditional regression based approaches neither convincingly measure market discrimination nor disentangle the relative importance of animus versus statistical discrimination in explaining such discrimination as exists we describe the development of modern correspondence studies we argue that these studies have the promise to credibly identify the presence of discrimination if not its magnitude can inform us about the underlying mechanism generating discrimination and can also point to avenues for new theoretical and empirical work on discrimination we discuss two articles with exemplary applications of these new methods at least since becker 1957 economists have been deeply interested in the presence of discrimination in markets in the 1970s and into the 1980s there was an active debate in the literature about whether discrimination was better described by becker s taste based discrimination model or by arrow and phelps statistical discrimination model that debate gave way to a theoretical literature that advanced each model separately and to an empirical literature focused on documenting the presence of disparities and the effects of policies designed to counteract discrimination only recently has the literature returned to the question of whether taste based or statistical discrimination is a more appropriate description of the phenomenon the two articles that follow are good examples of the move towards an understanding of the mechanisms underlying discrimination in this article we attempt to place the literature s recent direction into context and to show how it is a natural place for economists studying discrimination to arrive given where we began in the economics of discrimination becker explored ways in which individual tastes for discrimination might interact in a market setting to produce discriminatory outcomes for market participants becker described three models each considering a different source of discriminatory tastes employers co workers and customers the economics of discrimination included deep insights about discrimination becker clarified the distinction between individual tastes for discrimination and market discrimination he clarified the difference between segregation and market discrimination and he showed how the market might produce incentives for those with discriminatory tastes to avoid interaction with those towards whom they harbour animus 1

the labor market effects of credit market information we exploit a natural experiment to provide one of the first measurements of the causal effect of negative credit information on employment and earnings we estimate that one additional year of negative credit information reduces employment by 3 percentage points and wage earnings by 1 000 in comparison the decrease in credit is only one fourth as large negative credit information also causes an increase in self employment and a decrease in mobility further evidence suggests this cost of default is inefficiently borne by those most creditworthy among previous defaulters received april 5 2017 editorial decision september 2 2017 by editor andrew karolyi authors have furnished an internet appendix which is available on the oxford university press web site next to the link to the final published paper online

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

an equilibrium search matching model of discrimination abstract a model in which firms have incomplete information about workers at the hiring stage is shown to entail discrimination as the unique stable equilibrium outcome even if no agents have a taste for discrimination and groups are ex ante identical groups which are discriminated against e g blacks women earn lower wages and endure longer unemployment spells

sex discrimination in labor markets the role of statistical evidence reply correlations between statistically measured wage discrimination and confidential survey reports of discrimination are used to estimate the relative importance of statistical evidence in determining womens self assessed discrimination levels statistical evidence is found to be considerably less important than other nonstatistical evidence assuming courts weigh statistical versus other evidence as individuals do the effects of making statistical evidence admissible are calculated young well educated women are predicted to be the main beneficiaries of this policy copyright 1987 by american economic association

social networks and inequality abstract about half of all vacancies are filled through networks of personal contact we consider the arrow loury conjecture that such labor market networks exacerbate inequality our central result is that referral networks display threshold behavior above a critical density of referrals qualified workers at all levels of the network are recruited with probability one below the threshold the probability of referral falls exponentially and workers low in the hierarchy are hired with probability zero an underclass emerges

determinants of productivity differences in international manufacturing to access the influence of various factors on labor productivity a production function model of a plant in a labor intensive consumer goods industry is developed and estimated econometrically the model is derived from a production function specified in three functional forms which is expanded to include management and quality adjustment factors for the capital and labor inputs the management variable is a performance ranking of the plants in terms of meeting output quality and cost goals data on approximately 30 plants from a dozen countries over the period 1975 through 1982 was used for the analysis all of the plants are of a single multinational firm and produce similar products

cultural transmission and discrimination workers can have good or bad work habits these traits are transmitted from one generation to the next through a learning and imitation process which depends on parents investment in the trait and the social environment where children live if a sufficiently high proportion of employers have taste based prejudices against minority workers we show that their prejudices are always self fulfilled in steady state and minority workers end up having on average worse work habits than majority workers this leads to a ghetto culture affirmative action can improve the welfare of minorities whereas integration can be beneficial to minority workers but detrimental to workers from the majority group

distribution of ability and earnings in a hierarchical job assignment model we examine the mapping of the distribution of ability onto earnings in a hierarchical job assignment model workers are assigned to a continuum of jobs in fixed proportions ordered by sensitivity to ability the model implies a novel marginal productivity interpretation of wages we derive comparative statics for changes in technology and in the distribution of ability we find conditions under which a more unequal distribution of ability maps onto a more less unequal distribution of earnings we also analyze an assignment model with variable proportions and find that in the cobb douglas case a rise in the inequality of ability always narrows the range of earnings

discrimination and the effects of drug testing on black employment abstract a common assumption is that the rise of drug testing among u s employers must have had negative consequences for black employment i use variation in the timing and nature of drug testing regulation to identify the impacts of testing on black hiring i find that adoption of protesting legislation increases black employment in the testing sector by 7 to 30 and relative wages by 1 4 to 13 0 with the largest shifts among low skilled black men the results are consistent with ex ante discrimination and suggest that drug testing may benefit african americans by enabling nonusing blacks to prove their status to employers

bayesian identification a theory for state dependent utilities we provide a revealed preference methodology for identifying beliefs and utilities that can vary across states a notion of comparative informativeness is introduced that is weaker than the standard blackwell ranking we show that beliefs and state dependent utilities can be identified using stochastic choice from two informational treatments where one is strictly more informative than another moreover if the signal structure is known then stochastic choice from a single treatment is enough for identification these results illustrate novel identification methodologies unique to stochastic choice applications include identifying biases in job hiring loan approvals and medical advice

understanding the native immigrant wage gap using matched employer employee data evidence from germany in this article the author proposes a new method for measuring wage discrimination that builds on the methodology first developed by hellerstein and neumark 1999 the author s method has three m

matching with interviews abstract this paper explores how interviews affect the matching process when worker productivity is private information wages are determined by a single round of strategic bargaining after the worker is interviewed the implications of this hiring process for the efficiency of matching and the incidence and severity of statistical discrimination are considered the better are firms at identifying productive workers the worse the average quality of the unemployment pool so interviewing tends to slow down matching for every one multiple pareto rankable equilibria are possible such that any social group in a bad equilibrium faces stricter hiring standards longer spells of unemployment and lower welfare

does privatization improve job satisfaction the case of ghana this paper analyzes the impacts of privatization in ghana on the basis of a survey of 300 workers in privatized and state owned enterprises the findings indicate a significant positive relationship between privatization and job satisfaction whereas monthly wage is an important determinant of job satisfaction in state owned enterprises education and the availability of training opportunities are strong determinants in privatized enterprises the study also shows that there exists a variety of instruments to implement a privatization program smoothly

employer learning statistical discrimination and occupational attainment statistical discrimination plays a prominent role in theoretical discussions of the return to education as well as race and gender differences building on some earlier work by henry farber and robert gibbons 1996 hereafter fg and others on employer learning in the labor market altonji and pierret 2001 hereafter ap provide a test for statistical discrimination in an environment in which firms are learning about characteristics of workers over time however that model assumes that the rate at which employers learn about a given worker is independent of the type of job that he or she is in consequently the ap framework cannot readily be used to study statistical discrimination in hiring or how statistical discrimination and employer learning influence the skill level of the initial occupation and progression over a career in this paper i extend the ap analysis in three key respects first as in robert gibbons et al 2004 the sensitivity of output to worker skill is assumed to depend on the skill level of the job second the rate at which employers learn about the worker s skill is assumed to depend on the skill level of the job finally the probability of being hired into a given job depends on expected productivity relative to the wage i show that statistical discrimination influences initial employment rates wage levels and job type and that employers initial estimate of productivity influences wage growth even in an environment in which access to training is not an issue the implication is that the market may be slow to learn that a worker is highly skilled if the worker s best early job opportunity given the information available to employers is a low skill level job that reveals little about the worker s talent i close with a brief discussion of directions for empirical work suggested by the analysis

is credit status a good signal of productivity in this article the author uses a unique identification strategy along with credit proxy variables in a national data set to test whether credit status reveals information about an employee s char

an experimental study of statistical discrimination by employers this article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types the question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group if prior opinions are weak the employer will use information from the workplace to quickly update any incorrect group based stereotypes it may have on the other hand if priors are heavily weighted incorrect initial perceptions will result in persistent wage differences our experimental findings are twofold first subjects employers behavior moves quickly toward optimal choices second strong priors are hard to establish these results suggest that it would take a long time for employers to form group based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

ban the box convictions and public employment ban the box btb policies mandate deferred access to criminal history until later in the hiring process however these policies chiefly target public employers the study is the first to focus on the primary goal of btb reform by measuring the impact of btb policies on the probability of public employment for those with convictions to execute the analyses the study uses data from the national longitudinal survey of youth 1997 cohort 2005 2015 and difference in difference dd estimation the study finds that btb policies raise the probability of public employment for those with convictions by about 30 on average some scholars argue that btb policies encourage statistical discrimination against young low skilled minority males the study employs triple difference ddd estimation to test for statistical discrimination but uncovers no evidence to support the hypothesis jel j15 j71 j78 k4

wage interactions comparisons or fall back options this paper examines the degree to which the importance of wages elsewhere in wage determination stems from comparisons made by workers as opposed to re ecting unions fall back options in the bargaining process the di culty of distinguishing these hypotheses is shown in the context of a bargaining model

does affirmative action work caste gender college quality and academic success in india public policy in modern india features affirmative action programs intended to reduce inequality that stems from a centuries old caste structure and history of disparate treatment by gender we study the effects of one such affirmative action program an admissions policy that fixes percentage quotas common across more than 200 engineering colleges for disadvantaged castes and for women we show that the program increases college attendance of targeted students particularly at relatively higher quality institutions an important concern is that affirmative action might harm intended beneficiaries by placing them in academic programs for which they are ill prepared we find no evidence of such adverse impacts

worker characteristics and wage differentials evidence from a gift exchange experiment there is ample empirical evidence indicating that a substantial fraction of the population exhibits social preferences recent work also shows that social preferences influence the effectiveness of incentives in labor relations hence when making contracting decisions employers should take into account that workers are heterogenous with respect to both their productivity and their social preferences this paper presents causal evidence that they do in a real effort experiment we elicit measures of workers productivity and trustworthiness and make this information available to potential employers our data show that employers pay significant wage premia for both traits firms make highest profits with trustworthy workers in particular with highly productive and trustworthy workers we also document differences in the strength of gift exchange across worker types in particular output and profit levels of trustworthy workers are less dispersed than those of not trustworthy workers jel code c910 j410 d860

will affirmative action policies eliminate negative stereotypes a key question concerning affirmative action is whether the labor market gains it brings to minorities can continue without it becoming a permanent fixture in the labor market the authors argue that this depends on how the policy affects employers beliefs about the productivity of minority workers they study the joint determination of employer beliefs and worker productivity in a model of statistical discrimination in job assignments the authors prove that even when identifiable groups are equally endowed ex ante affirmative action can bring about a situation in which employers correctly perceive the groups to be unequally productive ex post copyright 1993 by american economic association

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 dis crimination 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 disconti nuities 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 vvtiich 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

grade inflation social background and labour market matching a model is presented where workers of differing abilities and from different social backgrounds are assigned to jobs based on grades received at school it is examined how this matching is affected if good grades are granted to some low ability students such grade inflation is shown to reduce the aggregate wage of the lower class workers because employers use social origin as a signal for productivity if grades are less than fully informative moreover the high ability students from the higher class may benefit from grade inflation since this shields them from the competition on the part of able students from the lower classes

salaries and piece rates compensation can take many forms remuneration can come as pecuniary payments as fringes such as health and pension benefits or as a nonpecuniary reward such as plush office furniture that costs the firm less than it benefits the worker a significant literature has examined the trade offs between pecuniary and nonpecuniary compensation the modern work having been pioneered by rosen 1974 more recently another body of literature has examined the selection of method of total compensation ignoring the distinction between pecuniary and nonpecuniary payment this work has focused on risk and incentive factors it has resulted in comparisons of compensation based on absolute output levels to that based on relative performance it has also led to explorations of the relation of compensation to experience over the work life 2 little attention has been paid to what may be among the most important and obvious distinction in methods of compensation namely the choice between a fixed salary for some period of time that is paying on the basis of input and some workers receive compensation that is specified in advance and not directly contingent on performance instead it depends on an input measure such as hours worked for others compensation is directly related to output this essay is an attempt to predict a firm s choice of compensation method piece rates are defined more rigorously among the more important factors discussed are worker heterogeneity incentives sorting considerations monitoring costs and asymmetric information one result is that salary workers tend to be of lower quality and more homogeneous than are their piece rate counterparts numerous additional results are provided helpful comments by victoria lazear and yoram weiss are gratefully acknowledged support was provided by the department of labor and the national science foundation 1 see lazear and rosen 1981 stiglitz 1981 holmstrom 1982 green and stokey 1983 2 see lazear 1979 1981 and harris and holmstrom in press

minimum wage effects on employment substitution and the teenage labor supply evidence from personnel data using personnel data from a large us retail firm i examine the firm s response to the 1996 federal minimum wage increase compulsory increases in average wages had negative but statistically insignificant effects on overall employment however increases in the relative wages of teenagers led to significant increases in the relative employment of teenagers especially younger and more affluent teenagers further analysis suggests a pattern consistent with noncompetitive models where the legislation affected mainly the wages of teenagers and so was only moderately binding it led both to higher teenage labor market participation and to higher absolute employment of teenagers

firms choice of method of pay using data from the bls industry wage survey the author tests the theory that firms choose their methods of pay by balancing the gains from more precise links between performance and pay against m

the impact of the london bombings on the well being of adolescent muslims we exploit the timing of the london bombings coinciding with a large scale national survey of adolescents to identify the impact of extremist islamic terror attacks on the well being of adolescent muslims our analysis reveals interesting gender differences we find evidence of a decline in the happiness of muslim teenage girls after the bombings which is also accompanied by a rise in expectations of facing discrimination in the labour market these findings are robust to several falsification tests on the other hand we fail to uncover compelling evidence of any impact of the bombings on muslim teenage boys

breaking free of a stereotype should a domestic brand pretend to be a foreign one consumers in many emerging markets exhibit a pronounced preference for western and global brands while domestic brands are often associated with a cheap but low quality image frustrated with the negative country of origin coo stereotype imposed on them many domestic brands from emerging markets follow a variety of approaches to disguise their coo and pretend to be foreign this paper studies the strategic aspects of this phenomenon we consider an experience good market where consumers learn about each brand s quality using its coo as a prior each firm can invest in product quality or coo dissociation the former generates better quality signals while the latter simply masks the firm s coo identity the analysis reveals a few main insights sharing a reputation leads to a common good problem where firms free ride on each other s quality investments as a high quality firm dissociates itself from the stereotype it ceases to contribute to the coo image but also prevents its low quality peers from free riding on it this incurs a negative direct effect but a positive strategic effect on the group image consequently a country s coo image may actually improve when more high quality brands shun their identities and pretend to be foreign in equilibrium coo image improves monotonically as firms become more efficient in providing quality however the prevalence of coo dissociation may first increase then decrease we discuss the implications of these results for emerging market brands as well as policy makers

a theory of sex discrimination abstract in this paper we put forward a theory that explains the way in which social attitudes towards sex discrimination in the labour market have evolved we suggest that sex discrimination in the labour market can generate both costs and benefits and that a sizeable part of these costs can be ameliorated through marriage the fact that marriage is no longer a pervasive and stable institution has contributed to the awareness that sex discrimination in the labour market is a major social problem

the enforcement of equal opportunity laws under imperfect information affirmative action and alternatives more than twenty years have passed since the enactment of the civil rights act during that period the enforcement of title vii with its broad prohibition of discrimination in employment and compensation has proved to be both difficult and controversial as part of any attempt to regulate economic activity we must be able to observe violations but unequal treatment in employment relationships is difficult to identify employers must always differentiate between individuals when making hiring and promotion decisions since applicants possess diverse skills and abilities this diversity creates a fundamental problem in monitoring the compliance or noncompliance of employers with equal opportunity laws this paper examines the enforcement of equal opportunity laws in a labor market that exhibits statistical discrimination this type of discrimination may arise as a rational response by profitmaximizing firms to imperfect information about individual productivity in lundberg and startz 1983 an equal opportunity policy prohibiting raceor sex specific wage schedules was shown to be an efficiency enhancing response to statistical discrimination section ii extends this model to allow information a role in allocating heterogeneous workers among jobs in this environment restricting firms use of information through an equal opportunity policy improves workers incentives to acquire human capital at the expense of production losses and its net effect on efficiency becomes ambiguous firms will attempt to evade an equal opportunity law presenting the government and the courts with the task of monitoring and enforcing compliance the regulators are likely to possess imperfect information not only about the relationship between worker characteristics and productivity but also about the actual personnel policies followed by firms in section iii a simple costminimizing evasion policy for firms in which other worker attributes are used as imperfect proxies for race or sex is outlined in the next two sections alternative policies for enforcing compliance

displacement asymmetric information and heterogeneous human capital gibbons and katz s asymmetric information model of the labor market predicts that wage losses following displacement should be larger for layoffs than for plant closings this was borne out in their empirical work in this article we examine how the difference in wage losses across plant closing and layoff varies with race and gender we find that the basic prediction by gibbons and katz holds only for white males we augment their asymmetric information model with heterogeneous human capital and show that this augmented model can match the data

the dynamic implications of search discrimination abstract blacks have both lower employment rates and lower earnings than whites further the earnings gap increases as workers age this paper focuses on explaining differences in black white earnings profiles and how government interventions work in a dynamic environment three contributions are made firstly multiple equilibria may exist solely because of a coordination failure by firms even without taste discrimination blacks may play no role in their poor labor market outcomes secondly search discrimination leads to economic discrimination against the non discriminated group reverse discrimination finally in response to a quota program whites may find it optimal to subsidize black investment

does job testing harm minority workers evidence from retail establishments because minorities typically fare poorly on standardized tests job testing is thought to pose an equality efficiency trade off testing improves selection but reduces minority hiring we develop a conceptual framework to assess when this trade off is likely to apply and evaluate the evidence for such a trade off using hiring and productivity data from a national retail firm whose 1 363 stores switched from informal to test based worker screening over the course of one year we document that testing yielded more productive hires at this firm raising mean and median tenure by 10 or more consistent with prior research minorities performed worse on the test yet testing had no measurable impact on minority hiring and productivity gains were uniformly large among minority and nonminority hires these results suggest that job testing raised the precision of screening without introducing additional negative information about minority applicants most plausibly because both the job test and the informal screen that preceded it were unbiased

crime versus justice is there a trade off abstract when society is divided into two groups with different actual or perceived crime rates maintaining a low crime rate minimizing the total number of innocent individuals convicted of a crime and keeping the probability of wrongly convicting an innocent individual equal across groups are incompatible social goals this paper fully develops these trade offs an empirical application of the model finds that these trade offs may be substantial specifically we estimate that innocent black americans would be roughly eight times more likely to be wrongly convicted of murder than innocent white americans if society placed no value on equality when it comes to convictions however we estimate that eliminating inequality entirely could cost up to 1 900 lives annually because of a rise in the murder rate estimates reveal similar findings for gender inequality in highlighting this serious dilemma this paper suggests a need for awareness of costs of crime reduction policies

orchestrating impartiality the impact of blind auditions on female musicians a change in the audition procedures of symphony orchestras adoption of blind auditions with a screen to conceal the candidate s identity from the jury provides a test for sex biased hiring using data from actual auditions in an individual fixed effects framework we find that the screen increases the probability a woman will be advanced and hired although some of our estimates have large standard errors and there is one persistent effect in the opposite direction the weight of the evidence suggests that the blind audition procedure fostered impartiality in hiring and increased the proportion women in symphony orchestras

ban the box criminal records and racial discrimination a field experiment ban the box btb policies restrict employers from asking about applicants criminal histories on job applications and are often presented as a means of reducing unemployment among black men who disproportionately have criminal records however withholding information about criminal records could risk encouraging racial discrimination employers may make assumptions about criminality based on the applicant s race to investigate btb s effects we sent approximately 15 000 online job applications on behalf of fictitious young male applicants to employers in new jersey and new york city before and after the adoption of btb policies these applications varied whether the applicant had a distinctly black or distinctly white name and the felony conviction status of the applicant we confirm that criminal records are a major barrier to employment employers that asked about criminal records were 63 more likely to call applicants with no record however our results support the concern that btb policies encourage racial discrimination the black white gap in callbacks grew dramatically at companies that removed the box after the policy went into effect before btb white applicants to employers with the box received 7 more callbacks than similar black applicants but btb increased this gap to 43 we believe that the best interpretation of these results is that employers are relying on exaggerated impressions of real world racial differences in felony conviction rates

arbitraging a discriminatory labor market black workers at the ford motor company 1918 1947 the 1918 47 employee records of the ford motor company provide a rare opportunity to study a firm willing to hire black workers when similar firms would not the evidence suggests that ford did profit from discrimination elsewhere but not by paying blacks less than whites an apparent wage equity constraint prevailed resulting in virtually no racial variation in wages inside ford an implication was that blacks quit ford jobs less often than whites holding working conditions constant arbitrage profit came from exploiting this nonwage margin as ford placed blacks in hot dangerous foundry jobs where quit rates were generally high

information learning and wage rates in low income rural areas in this essay we present evidence that employers in rural areas of developing countries have imperfect information with regard to the productivity of heterogeneous workers in addition to obtaining direct measures of the completeness of employer information we consider the implications of information asymmetries for the structure of casual labor markets we then evaluate the extent to which casual labor markets do in fact exhibit these attributes we find that 1 there is adverse selection out of the time rate labor market 2 employers discriminate statistically given two workers with different observed characteristics but the same actual productivity the worker from the group with the higher average productivity will have a higher wage 3 employers exhibit learning over time the extent of employer ignorance is negatively related to labor market exposure on the part of the workers and 4 calorie consumption affects productivity but is not rewarded in the time rate labor market in concluding we argue that an analysis of wage and employment patterns and the implications of these patterns for human capital investment in rural areas of developing countries that ignored the role of information problems could yield misleading conclusions

statistical discrimination and efficiency this paper asks whether statistical discrimination is a market failure i consider the problem for a utilitarian social planner who operates in an environment that can generate statistical discrimination as an equilibriumphenomenon it is found that there are potential efficiency gains from discrimination in terms of reduced mismatch between workers and jobs whether the solution to the planning problem involves discrimination depends on the trade off between the informational gains of specialization and the losses in terms of increased investment costs

trade unions v statistical discrimination theory and application to post apartheid south africa a simple model of statistical discrimination is analyzed which captures some stylized facts of the south african labor market it shows that this type of discrimination disappears when the wage rates are determined by efficient bargaining between a representative firm and a union with endogenous membership this may explain why the wage gap between black and white workers in post apartheid south africa is smaller among unionized workers than among non unionized ones

do job networks disadvantage women evidence from a recruitment experiment in malawi using a eld experiment in malawi where men and women apply for future surveyor positions with a local rm we nd that highly skilled women are systematically disadvantaged through the use of referrals this happens both because most men recommend other men and because women refer fewer candidates who qualify for the position we document that segregated networks do not cause this behavior we develop a theoretical model of referral choice and exploit random variation in referral contract terms to nd that that both men s and women s biases result from social incentives rather than expectations of performance we also document that the screening potential of networks is maximized when men refer men this paper suggests that the use of social networks in hiring is an additional channel through which women are disadvantaged in the labor market

second order statistical discrimination abstract the low representation of female workers in elite jobs is sometimes attributed to a tail effect if the human capital distribution exhibits less variation among females than among males then even with comparable average human capital there will be fewer females in the right tail than males this paper offers an explanation for why the human capital distribution might have this property we show that the belief that the female human capital distribution has a lower variance than the male distribution can be self fulfilling in that it provides individuals with incentives to invest in human capital such that the resulting distribution exhibits exactly this characteristic if this happens fewer females are employed in high end jobs a glass ceiling effect the average productivity of female workers may at the same time be higher than that of male workers

a general equilibrium model of statistical discrimination we study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium the interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize discrimination may arise even if the corresponding model with a single group has a unique equilibrium the dominant group gains from discrimination rationalizing why a majority may be reluctant to eliminate discrimination the model is also consistent with reverse discrimination as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity

wages employment and statistical discrimination evidence from the laboratory i introduction while taste based discrimination becker 1957 is driven by prejudice research on statistical discrimination attempts to explain differential treatment of individuals unrelated to prejudice in essence statistical discrimination results when the actual or assumed statistical properties of a group are applied to anyone belonging to that group differential treatment based on lower average outcomes of one s group e g minorities females was considered a starting point for modeling of statistical discrimination see phelps 1972 however labor market researchers then considered that statistical discrimination could result from measures other than the average outcomes of one s group see aigner and cain 1977 lundberg and startz 1983 theoretical models have explored various reasons why statistical discrimination might arise in varied contexts most notable are the models based on differential screening or communication costs cornell and welch 1996 lang 1986 noisier productivity signals see discussion in aigner and cain 1977 or incomplete information lundberg and startz 1983 1 field studies some of which involve experimental manipulations have uncovered evidence of statistical discrimination in mortgage lending ladd 1998 auto sales ayers and siegelman 1995 goldberg 1996 harless and hoffer 2002 sports card price negotiations list 2004 law enforcement decisions applebaum 1996 exam grading hanna and linden 2012 taxi fare negotiations castillo et al 2013 and vehicle repair estimates gneezy and list 2006 in labor markets some discrimination may be due to factors other than productivity characteristics neumark 1999 but the evidence for statistical discrimination based on race has been elusive see altonji and pierret 2001 identifying statistical discrimination from field data is complicated by the fact that it may arise as first moment or second moment statistical discrimination and they are difficult to disentangle empirically more controlled laboratory studies have also examined statistical discrimination anderson and haupert 1999 castillo and petrie 2010 davis 1987 dickinson and oaxaca 2009 fershtman and gneezy 2001 masclet peterle and larribeau 2012 2 findings from these laboratory studies indicate that statistical discrimination may result from aversion to risk mistaken stereotypes biased probability assessments or incomplete information the benefit of the laboratory approach is our ability to control and cleanly identify the source of the discrimination if it exists whether taste based or statistical discrimination is most always measured along a single dimension such as vehicle pricing labor market wages group choice or job assignments 3 however in many instances multiple avenues for discrimination exist simultaneously and to focus on only one may produce a systematically biased view of the prevalence of statistically based discrimination 4 in this paper we examine statistical discrimination in a controlled experimental environment statistical discrimination in our study can only be based on productivity distribution risk attached to worker groups we not only cleanly separate taste based from statistical discrimination but we also cleanly isolate second moment statistical discrimination in a way not possible from field data building on dickinson and oaxaca 2009 our key contribution is to examine an environment in which discrimination may be exercised simultaneously along the dimensions of both wages and employment rates this more closely approximates the field environments we hope to study where discrimination may exist in terms of labor market wages and or hiring practices auto sales prices and or sales rates mortgage rates and or home sales as in dickinson and oaxaca 2009 subjects negotiate in a simulated labor market where worker subjects are given an induced common knowledge productivity distribution

statistical discrimination productivity and the height of immigrants building on the economic research that demonstrates a positive relationship between height and worker ability the author compares wage returns to height for immigrants and for natives to explore possible explanations for the positive wage height gradient using multiple data sets the article presents a robust empirical finding that the wage gains associated with height are almost twice as large for immigrants as for native born individuals this wage relationship occurs because the productivity gap between tall and short immigrants is greater than the productivity gap between tall and short native born workers the author next tests for the possibility that in the relative absence of other sources of information about immigrants employers place more importance on height for immigrants than for native born individuals the evidence does not support the hypothesis of statistical discrimination based on height

affirmative action in a competitive economy abstract we consider a model of endogenous human capital formation with competitively determined wages discrimination is sustainable in equilibrium in the presence of two distinguishable but ex ante identical groups of workers an affirmative action policy consisting of a quota may fail in the sense that there still may be equilibria where groups are treated differently however the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy the welfare effects are ambiguous it is possible that the policy makes the intended beneficiaries worse off even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group

trends in the well being of american women 1970 1995 this paper examines the trends in the well being of american women over the last 25 years a time of significant changes in the relative economic status of women and in the labor market as a whole a broad range of indicators are considered to capture changes in women s well being in the family as well as in the labor market for virtually all age and education groups substantial evidence is obtained of rising gender equality in labor market outcomes notably labor force participation wages and occupational distributions broad evidence is also found of greater gender parity within married couple families as the housework time of husbands increased relative to wives and the relative wages of wives rose compared to their husbands however parallel to the recent evidence of the declining labor market position of lower skilled men there has been a similar deterioration in the economic status of less educated women especially high school dropouts their labor force participation rates and wages have risen at a much slower pace than those of more highly educated women while their incidence of single headship has increased much more rapidly these findings for less educated women serve to underscore the widening gap between more and less skilled americans of both sexes as well as to emphasize its broad dimensions

the determination of contract wages in west germany the determination of contract wages in west germany is studied within a bargaining framework taking into account some institutional features of the bargaining system as well as the influence of economic forecasts and wage concepts cointegration regressions suggest that in the long run nominal contract wages are linked to prices productivity each with a unit elasticity and unemployment in addition to these factors expectational errors concerning the inflation rate during the contract period and changes in the tax wedge affect real wage growth in the short run but these effects seem to be temporary rather than permanent

the labor market impact of state level anti discrimination laws 1940 1960 by the time congress passed the 1964 civil rights act 98 of non southern blacks 40 of all blacks already resided in states with fair employment laws prohibiting labor market discrimination using census data from the integrated public use microdata series the author assesses the impact of fair employment legislation on black workers relative income unemployment labor force participation migration and occupational and industrial distributions in general the fair employment laws adopted in the 1940s appear to have had larger effects than those adopted in the 1950s and the laws had considerably smaller effects on the labor market outcomes of black men than on those of black women

education and labor market discrimination using a model of statistical discrimination and educational sorting we explain why blacks get more education than whites of similar cognitive ability and we explore how the armed forces qualification test afqt wages and education are related the model suggests that one should control for both afqt and education when compar ing the earnings of blacks and whites in which case a substantial black white wage differential emerges we reject the hypothesis that differences in school quality between blacks and whites explain the wage and education differentials our findings support the view that some of the black white wage differential reflects the operation of the

experience tenure and the perceptions of employers this paper examines how group based assessments concerning employee ability impact employee compensation the employer learns about worker ability through bayesian updating creating an additional channel for wage growth that is not available to those workers with only general labor market experience consistent with the model s predictions results from national longitudinal survey of youth nlsy indicate that black workers fare much better relative to white workers in returns to tenure than in returns to experience finally parameter estimates in the structural model suggest that employers initially undervalue black males but that their wages rise with learning by employers over time on average black males earn lower wages than white males just as average wages differ across many groups this paper examines one explanation for this wage gap the possibility that employers underestimate the ability of workers in one or more groups in particular this paper proposes a model that provides explicit predictions about the affect of employer s perceptions on workers returns to general experience and tenure on the job we then examine the wage growth of young males to see whether patterns are consistent with the model economic theory provides many other explanations for differences in wages across groups