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Statistical Discrimination with Employment Criteria

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  • Sattinger, Michael

Abstract

This paper develops the theory of statistical discrimination in the form of unequal employment criteria and interviews. Workers differ by imperfectly observed 'quit rate.' Profit maximization leads firms to set stricter employment criteria or interview fewer workers from the group with a greater proportion of high-quit-rate workers. The theory can explain unemployment differences between groups and the total exclusion of a group from a labor market. Although statistical discrimination constitutes economic discrimination according to a criterion of harm to a group, it may or may not be efficient because of the presence of externalities. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Sattinger, Michael, 1998. "Statistical Discrimination with Employment Criteria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 205-237, February.
    • Handle: RePEc:ier:iecrev:v:39:y:1998:i:1:p:205-37
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    Cited by:

    1. Audra J. Bowlus & Zvi Eckstein, 2002. "Discrimination and Skill Differences in an Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1309-1345, November.
    2. Yannick L'Horty & Mathieu Bunel & Pascale Petit, 2019. "Testing for redlining in the labour market," Spatial Economic Analysis, Taylor & Francis Journals, vol. 14(2), pages 153-173, April.
    3. Terry Sicular, 1998. "Capital Flight and Foreign Investment: Two Tales From China and Russia," The World Economy, Wiley Blackwell, vol. 21(5), pages 589-602, July.
    4. Mathieu Bunel & Yannick L’Horty & Pascale Petit, 2016. "Discrimination based on place of residence and access to employment," Urban Studies, Urban Studies Journal Limited, vol. 53(2), pages 267-286, February.
    5. S. Nuray Akin & Brennan Platt, 2012. "Running Out of Time: Limited Unemployment Benefits and Reservation Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(2), pages 149-170, April.
    6. Vanessa Scholes, 2014. "You Are Not Worth the Risk: Lawful Discrimination in Hiring," Rationality, Markets and Morals, Frankfurt School Verlag, Frankfurt School of Finance & Management, vol. 5(82), February.
    7. Adrian Masters, 2004. "Firm level hiring policy with culturally biased testing," Discussion Papers 04-14, University at Albany, SUNY, Department of Economics.
    8. Masters, Adrian, 2014. "Statistical discrimination from composition effects in the market for low-skilled workers," Labour Economics, Elsevier, vol. 26(C), pages 72-80.
    9. Cem Baslevent & Hasan Kirmanoğlu, 2012. "Do Preferences for Job Attributes Provide Evidence of 'Hierarchy of Needs'," Working Papers 201201, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University.
    10. Cem Başlevent & Hasan Kirmanoğlu, 2013. "Do Preferences for Job Attributes Provide Evidence of ‘Hierarchy of Needs’?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(2), pages 549-560, April.
    11. Hogelund, Jan & Holm, Anders, 2006. "Case management interviews and the return to work of disabled employees," Journal of Health Economics, Elsevier, vol. 25(3), pages 500-519, May.
    12. Ahn, Tom & Arcidiacono, Peter & Murphy, Alvin & Swinton, Omari, 2010. "Explaining cross-racial differences in teenage labor force participation: Results from a two-sided matching model," Journal of Econometrics, Elsevier, vol. 156(1), pages 201-211, May.
    13. Pfeifer, Christian & Sohr, Tatjana, 2008. "Analysing the Gender Wage Gap Using Personnel Records of a Large German Company," IZA Discussion Papers 3533, Institute of Labor Economics (IZA).
    14. Hämäläinen, Kari, 2003. "Education and Unemployment: State Dependence in Unemployment Among Young People in the 1990s," Discussion Papers 312, VATT Institute for Economic Research.
    15. Fujii, Mayu & Shiraishi, Kousuke & Takayama, Noriyuki, 2018. "The effects of early job separation on later life outcomes," Journal of the Japanese and International Economies, Elsevier, vol. 48(C), pages 68-84.
    16. 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.
    17. Eriksson, Stefan, 2002. "Imperfect information, wage formation, and the employability of the unemployed," Working Paper Series 2002:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    18. Nisar Ahmad, 2014. "State Dependence in Unemployment," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 93-106.

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