Definition: Statistical discrimination is a theory of why minority groups are paid less when hired. The theory is
roughly that managers, who are of one type (say, white), are more culturally
attuned to the applicants of their own type than to applicants of another type
(say, black), and therefore they have a better measure of the likely
productivity of the applicants of their own type. (There is uncertainty in
the manager's predictions about blacks and probably of whites too, but more
uncertainty for blacks.) Because the managers are risk averse they bid more
for a white applicant of a given apparent productivity than for a black one,
since their measure of the white's productivity is better. This theory
predicts that white managers would offer black applicants lower starting wages
than whites of the same apparent ability, even if the manager is not
prejudiced against the blacks.
Terms related to Statistical Discrimination:
None
About.Com Resources on Statistical Discrimination:
None
Writing a Term Paper? Here are a few starting points for research on Statistical Discrimination:
Books on Statistical Discrimination:
None
Journal Articles on Statistical Discrimination:
None
