American Economic Journal: Microeconomics
no. 3, August 2023
We analyze equilibrium outcomes under costly screening of candidates from distinct categories. Candidates choose how much effort to invest in skill acquisition, and the screener decides how carefully to screen each candidate. Typically, there are multiple equilibria, and ex ante identical individuals in different categories can receive different equilibrium treatment. The imposition of a quota for an initially disadvantaged group can result in increased screening intensity and skill investment by destabilizing the least active equilibrium. The endogeneity of screening enables powerful comparative statics, which we use to unify different strands in the literature on discrimination.
Fosgerau, Mogens, Rajiv Sethi, and Jörgen Weibull.
"Equilibrium Screening and Categorical Inequality."
American Economic Journal: Microeconomics,
Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Personnel Economics: Firm Employment Decisions; Promotions