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Faculty of Economics

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Ramachandran, R. and Rauh, C.

Discrimination Without Taste - How Discrimination can Spillover and Persist

CWPE1466

Abstract: We introduce coordination failures driven by beliefs regarding the presence of taste discriminators as a channel of discrimination in activities requiring the input of more than one individual for production to occur. We show discrimination can persist forever under perfectly observable ability, when taste for discrimination has died out, and under absence of discriminatory social norms. Empirically, we analyze the market for self-employment in the US, a market requiring input from multiple sources. Consistent with the theoretical prediction, we find beliefs about discrimination to be a significant negative correlate of self-employment rates of blacks in the US.

Keywords: Discrimination, Coordination Failure, Beliefs

JEL Codes: C73 D83 J71

Author links: Christopher Rauh  

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1466.pdf

Open Access Link: https://doi.org/10.17863/CAM.5828