The Effect of Statistical Discrimination on Black-White Wage Inequality: Estimating a Model with Multiple Equilibria


by Andrea Moro.
International Economic Review 44 (2), May 2003, 467-500 : PDF
This paper presents the structural estimation of a statistical discrimination model. Although the model is capable of displaying multiple equilibria, an estimation strategy that identifies both the parameters of the model and the equilibrium chosen by the economic agents is developed and empirically implemented. A comparison between the equilibria that were selected in the economy over time and the other potential equilibria reveals that the decline in wage inequality experienced in the U.S. economy in the last thirty years cannot be attributed to changes in the equilibrium selection.

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