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Discrimination without taste: how discrimination can spillover and persist

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  • Rajesh Ramachandran

    (Heidelberg University
    Goethe University Frankfurt)

  • Christopher Rauh

    (University of Montreal, CIREQ)

Abstract

We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a channel of discrimination in productive activities requiring the input of multiple agents. We show that discrimination can persist under perfectly observable ability, when taste for discrimination has died out, and under absence of discriminatory social norms. Empirically we analyze the market for self-employment—an activity commonly requiring inputs from multiple agents. Consistent with the theoretical predictions, beliefs about discrimination are a significant correlate of self-employment rates, as well as the cost and success of establishing productive relations for blacks in the US.

Suggested Citation

  • Rajesh Ramachandran & Christopher Rauh, 2018. "Discrimination without taste: how discrimination can spillover and persist," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(3), pages 249-274, August.
    • Handle: RePEc:spr:series:v:9:y:2018:i:3:d:10.1007_s13209-018-0179-z
    DOI: 10.1007/s13209-018-0179-z
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    Cited by:

    1. Anthony Edo & Nicolas Jacquemet & Constantine Yannelis, 2019. "Language skills and homophilous hiring discrimination: Evidence from gender and racially differentiated applications," Review of Economics of the Household, Springer, vol. 17(1), pages 349-376, March.
    2. Daskalova, Vessela, 2018. "Discrimination, social identity, and coordination: An experiment," Games and Economic Behavior, Elsevier, vol. 107(C), pages 238-252.
    3. Lippens, Louis & Baert, Stijn & Ghekiere, Abel & Verhaeghe, Pieter-Paul & Derous, Eva, 2020. "Is labour market discrimination against ethnic minorities better explained by taste or statistics? A systematic review of the empirical evidence," GLO Discussion Paper Series 615, Global Labor Organization (GLO).
    4. Dewan, Torun & Wolton, Stephane, 2019. "A Political Economy of Social Discrimination," MPRA Paper 94394, University Library of Munich, Germany.

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    More about this item

    Keywords

    Discrimination; Coordination failure; Beliefs; Inequality;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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