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Discrimination as Focal Point

In: Handbook on Economics of Discrimination and Affirmative Action

Author

Listed:
  • Kaushik Basu

    (Cornell University)

Abstract

This chapter presents a theory of discrimination for markets in which there are complementarities between different tasks. It is shown that, in such a setting, even when groups are a priori identical, employers will end up discriminating against certain groups. Group discrimination serves the purpose of creating a focal point in a market game. In this model, the free market, far from curbing discrimination, nurtures it and thereby creates the need for purposive policy intervention. It is argued that, with the rise of technology, the problem of discrimination as focal point will get more acute and we will have to think in terms of affirmative action or a system of taxation and subsidy to support groups that get excluded.

Suggested Citation

  • Kaushik Basu, 2023. "Discrimination as Focal Point," Springer Books, in: Ashwini Deshpande (ed.), Handbook on Economics of Discrimination and Affirmative Action, chapter 6, pages 105-116, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-4166-5_8
    DOI: 10.1007/978-981-19-4166-5_8
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