Dundee Discussion Papers in Economics 088: A theory of discrimination based on signalling and strategic information acquisition

Ajit Mishra

    Research output: Working paperDiscussion paper

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    Abstract

    The paper develops a “signalling” based theory of discrimination where workers face different incentives for skill acquisition purely because of their group membership. Workers belonging to the disadvantaged group bear substantial signalling cost. The difference in signalling costs between groups is not due to any unexplained group heterogeneity but discriminatory information policy of the employer. Based on its belief about the group, an employer may not acquire relevant information about the workers of this group, even if such information were costless. It is shown that affirmative action policies can help in the presence of nonconvex signalling technology. Factors like co-ordination amongst workers, presence of a ‘dynamic’ labour market and sub-group formation seem to affect the nature and degree of discrimination.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 1998

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.88
    ISSN (Print)1473-236X

    Keywords

    • Signalling
    • Discrimination
    • Affirmative action
    • Information acquisition

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