Åsa Rosén: SOFI, Postal: Stockholm University, SE-106 91 Stockholm, Sweden
Abstract: This paper analyses Becker´s (1971) theory of employer discrimination within a search and wage-bargaining setting. Discriminatory firms pay workers who are discriminated against less, and apply stricter hiring-criteria to these workers. It is shown that the highest profits are realized by firms with a positive discrimination coefficient. Moreover, once ownership and control are separated, both highest profits and highest utility may be realized by firms with a positive discrimination coefficient. Thus, market forces, like entry and/or takeovers do not ensure that wage differentials due to employer discrimination will disappear.
30 pages, June 4, 1998
Full text files
wp1998_13nv.pdf Revised version
1998wp13.pdf Original version
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