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‘If You Believe That Discrimination Exists, It Will’*†

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  • ALI M. AHMED

Abstract

A model is presented where identical firms announce vacancies and wages and workers apply to the firm. Workers are of two types, b and g, but identical in productivity. Firms do not prefer a particular type of worker over another; however, a common belief among all workers is that type b workers are discriminated against. This causes type b workers to avoid applying for jobs that offer wages perceived to be too high. In equilibrium some firms announce high wages thereby attracting only type g workers, while others announce low wages thereby attracting only type b workers.

Suggested Citation

  • Ali M. Ahmed, 2008. "‘If You Believe That Discrimination Exists, It Will’*†," Manchester School, University of Manchester, vol. 76(6), pages 613-628, December.
    • Handle: RePEc:bla:manchs:v:76:y:2008:i:6:p:613-628
    DOI: 10.1111/j.1467-9957.2008.01085.x
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    References listed on IDEAS

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    Cited by:

    1. Julio J. Rotemberg, 2012. "Prominent Job Advertisements, Group Learning and Wage Dispersion," NBER Working Papers 18638, National Bureau of Economic Research, Inc.
    2. Julio J. Rotemberg, 2017. "Group Learning, Wage Dispersion and Non-stationary Offers," Economica, London School of Economics and Political Science, vol. 84(335), pages 365-392, July.

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