Abstract
On the presumption that more information improves economic decision-making, it is often claimed that statistical discrimination reduces inefficiencies. Outlawing discrimination then means foregone efficiency gains. This paper examines whether there is indeed an uncomfortable trade-off between equality and efficiency, by reconsidering some of the most significant statistical-discrimination models. The conclusion is that there is no firm basis for supposing that statistical discrimination is efficient. As well as disputing the efficiency claim, the paper casts further doubts on the common interpretation of the decomposition of empirical wage differentials.
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Haagsma, R. Statistical Discrimination in the Labour Market: An Efficient Vice?. De Economist 146, 321–345 (1998). https://doi.org/10.1023/A:1003253113076
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DOI: https://doi.org/10.1023/A:1003253113076