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Discrimination in the Labour Market

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  • Greg Leblanc

Abstract

Statistical discrimination contracts screen employees based on gender or race. Because the theory entails profit maximization, it represented an improvement over taste-based theories of discrimination. Truly profit-maximizing firms may be able to improve on these contracts, however, by offering contracts that self-select for the productivity-affecting unobservable variable(s). In this case, statistical discrimination is subject to the same criticism as taste-based discrimination--there is an opportunity for profitable entry by nondiscriminators. Results show that, when the risk of a low-productivity worker is sufficiently high, a self-selecting contract often dominates the statistical discrimination contracts.

Suggested Citation

  • Greg Leblanc, 1995. "Discrimination in the Labour Market," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 702-717, August.
    • Handle: RePEc:cje:issued:v:28:y:1995:i:3:p:702-17
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    Cited by:

    1. Bernier, Rachel, 1998. "Les dimensions de l'inegalite salariale chez les Autochtones," Direction des études analytiques : documents de recherche 1997109f, Statistics Canada, Direction des études analytiques.
    2. Dragos BIGU, 2009. "Discrimination and Profit," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(5), pages 1021-1027, December.
    3. Havet, Nathalie, 2004. "Écarts salariaux et disparités professionnelles entre sexes : développements théoriques et validité empirique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 80(1), pages 5-39, Mars.
    4. Bernier, Rachel, 1998. "The Dimensions of Wage Inequality Among Aboriginal Peoples," Analytical Studies Branch Research Paper Series 1997109e, Statistics Canada, Analytical Studies Branch.

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