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Discrimination, technology and unemployment

Author

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  • Luca Paolo Merlino

    (ECARES - European Center for Advanced Research in Economics and Statistics - ULB - Université libre de Bruxelles)

Abstract

I study the interaction between discrimination and investment using a directed search model where firms decide the capital intensity of their production technologies before being matched. Discrimination makes some workers cheap to hire. As a consequence, some firms might save on capital costs adopting labour intensive technologies. This framework allows to reconcile search models with three well-known facts regarding the labour market outcomes of minority workers: low wages, high unemployment and occupational segregation. Furthermore, the model questions the role of equal pay legislation in reducing inequality since removing this restriction, i.e., allowing firms to post type-contingent wages, eliminates the negative effects of discrimination on investment and wages.

Suggested Citation

  • Luca Paolo Merlino, 2012. "Discrimination, technology and unemployment," Post-Print hal-01263757, HAL.
    • Handle: RePEc:hal:journl:hal-01263757
    DOI: 10.1016/j.labeco.2012.05.006
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    Citations

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    Cited by:

    1. Luca Paolo Merlino & Pierpaolo Parrotta & Dario Pozzoli, 2018. "Gender Differences in Sorting," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(4), pages 671-709, October.
    2. Luca Paolo Merlino & Pierpaolo Parrotta & Dario Pozzoli, 2018. "Gender Differences in Sorting," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(4), pages 671-709, October.
    3. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Documents de travail du Centre d'Economie de la Sorbonne 16002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Merlino, Luca Paolo, 2016. "Efficient Sorting In Frictional Labor Markets With Two-Sided Heterogeneity," Macroeconomic Dynamics, Cambridge University Press, vol. 20(1), pages 95-119, January.
    5. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277548, HAL.
    6. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Post-Print halshs-01277548, HAL.
    7. Luca Paolo Merlino & Pierpaolo Parrotta & Dario Pozzoli, 2012. "Assortative Matching Gender," Working Papers ECARES ECARES 2012-040, ULB -- Universite Libre de Bruxelles.
    8. BI, Sheng & LI, Yuanyuan, 2015. "Holdup and hiring discrimination with search friction," MPRA Paper 65100, University Library of Munich, Germany.

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    More about this item

    Keywords

    Discrimination; Pre-matching investment; Directed search; Unemployment;
    All these keywords.

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets

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