A characterization of "Phelpsian" statistical discrimination
Theoretical Economics
2018-08-07 v1
Abstract
We establish that statistical discrimination is possible if and only if it is impossible to uniquely identify the signal structure observed by an employer from a realized empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent, remuneration for workers. Finally, we connect the statistical discrimination literature to Bayesian persuasion, establishing that if discrimination is absent, then the optimal signaling problem results in a linear payoff function (as well as a kind of converse).
Keywords
Cite
@article{arxiv.1808.01351,
title = {A characterization of "Phelpsian" statistical discrimination},
author = {Christopher P. Chambers and Federico Echenique},
journal= {arXiv preprint arXiv:1808.01351},
year = {2018}
}