Published in «Russian Journal of Labor Economics»1 / 2019
DOI: 10.18334/et.6.1.39701

Information causes of labour market discrimination

Tagarov Bato Zhargalovich, Baikal State University, Russia

Информационные причины дискриминации на рынке труда - View in Russian

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Highlights:
• • Discrimination due to the personal factors is becoming less important in today's economy and economic discrimination is becoming increasingly urgent, through which the employer maximizes the return on employee expenses.
• Economic discrimination can take the following forms: monopsonistic discrimination, statistical discrimination, market-based discrimination.
• Monopsonistic discrimination means that the employer with the information on the elasticity of the labour supply of employees, differentiates the employees wages with equal efficiency on the basis of their "supply prices".
• The cause of statistical discrimination is the information asymmetry in favor of the applicant. In this situation, the employer decides to hire based on average characteristics of the group that the employee is a part of.
• The cause of marked-based discrimination is the cost of finding a job. As the under-informed applicant does not wish to bear these costs, he/she will agree to a lower salary than the applicant who has more information.
• Statistical discrimination reduces motivation to invest in human capital and increases the motivation of applicants to invest in information signals that distinguish them from the social group.
• The employer's advantage of having awareness about the employee's productivity over other employers increases his monopoly power over him.
• Members of the social group who have been statistically discriminated against are motivated to migrate to labour markets where information on discriminatory grounds is unavailable.

Abstract:
The author studies the types and causes of labour market discrimination associated with its information non-transparency, as well as its effects. There are following types of discrimination: monopsonistic, statistical and market-based. It is shown that they occur due to information causes. Effects of statistical discrimination have been analysed. A conclusion was made that the employees who are discriminated against lose their motivation to invest in human capital, but wish to invest in giving a positive information signal. It has been proven that the employees in the discriminated group are seeking to enter markets where employers will not be able to get information on non-occupational grounds.

Keywords:

discrimination, information asymmetry, labor market, remote employment, statistical discrimination

JEL-Classification: J01, J31, L15

Citation:
Tagarov B.Zh. (2019). Information causes of labour market discrimination [Informatsionnye prichiny diskriminatsii na rynke truda]. Russian Journal of Labor Economics, 6(1). (in Russian). – doi: 10.18334/et.6.1.39701.


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