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High Standards Enhance Inequality in Idealized Labor Markets

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Abstract

We built a simple model of an idealized labor market, in which there is no objective difference in average quality between groups and hiring decisions are not biased in favor of any particular group. Our results show that inequality in employment emerges necessarily also in such idealized situations due to the limited supply of high quality individuals and asymmetric information. Inequalities are exacerbated when employers have high standards and keep only the best workers in house. We found that ambitious workers get higher quality jobs even if ambition does not correlate or even negatively correlates with internal quality. Our findings help to corroborate empirical findings on higher employment discrepancies in high rather than low status jobs.

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  • Károly Takács & Flaminio Squazzoni, 2015. "High Standards Enhance Inequality in Idealized Labor Markets," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 18(4), pages 1-2.
    • Handle: RePEc:jas:jasssj:2014-118-3
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    Cited by:

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    2. Lukac, Martin & Grow, André, 2020. "Reputation systems and recruitment in online labor markets: insights from an agent-based model," LSE Research Online Documents on Economics 114454, London School of Economics and Political Science, LSE Library.

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