Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/20686
Authors: 
Lundberg, Shelly
Startz, Richard
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion paper series 1389
Abstract: 
This paper presents several economic models that explore the relationships between imperfect information, racial income disparities, and segregation. The use of race as a signal arises here, as in models of statistical discrimination, from imperfect information about the return to transactions with particular agents. In a search framework, signaling supports not simply a discriminatory equilibrium, but a pattern of racially segregated transactions, which in turn perpetuates the informational asymmetries. Minority groups necessarily suffer disproportionately from segregation, since the degree to which transactions opportunities are curtailed depends upon group size, as well as the informational ?distance? between racial groups. However, in some variants of the model, minority agents will self-segregate since they face an adverse selection of majority agents who are willing to trade with them. We also show that, if agents are able to learn from transactions, racial signaling can emerge with only minimal assumptions about the ex ante importance of race.
Subjects: 
race
segregation
discrimination
imperfect information
search
JEL: 
J7
D83
Document Type: 
Working Paper

Files in This Item:
File
Size
520.94 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.