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Discrimination in the Equilibrium Search Model with Wage-Tenure Contracts

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  • Zheng Fang

    (Nanyang Technological University, Singapore)

  • Chris Sakellariou

    (Nanyang Technological University, Singapore)

Abstract

This paper extends Burdett and Coles (2003)'s search model to two types of workers and firms and derives the equilibrium earnings distributions for both types of workers. It is proven that minority workers have a higher unemployment rate than majority workers; discriminating firms make lower profit than non-discriminating firms; offers to minority workers by non-discriminating firms are consistently superior to those by discriminating firms, and at the same wage level, majority workers almost always experience a faster wage increase than the minority workers.

Suggested Citation

  • Zheng Fang & Chris Sakellariou, 2013. "Discrimination in the Equilibrium Search Model with Wage-Tenure Contracts," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 451-480, November.
    • Handle: RePEc:cuf:journl:y:2013:v:14:i:2:fang:sakellariou
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    Cited by:

    1. Fang, Zheng & Sakellariou, Chris, 2015. "Discrimination or Unobserved Differences in Characteristics?-An Empirical Study on Wage Inequality," MPRA Paper 68568, University Library of Munich, Germany.

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    More about this item

    Keywords

    Discrimination; Search model; Wage-tenure contract;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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