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LABOR MARKET PERFORMANCE EFFECTS OF DISCRIMINATION AND LOSS OF SKILL
Author(s) -
Larsen Birthe,
Waisman Gisela
Publication year - 2016
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12335
Subject(s) - unemployment , economics , labour economics , matching (statistics) , immigration , demographic economics , macroeconomics , history , statistics , mathematics , archaeology
We examine the impact of discrimination on labor market performance when workers are subject to a risk of losing skills during an unemployment experience. Within a search and matching framework, we show that both natives and immigrants are affected by discrimination. Discrimination in one sector has positive spillovers, inducing employment to increase in the other sector and the effect on labor market performance therefore depends on whether discrimination is present in only one sector or in both. Discrimination may induce workers to train more or less than natives after having lost their skills, dependent upon in which sector there is discrimination. Net output tends to be most negatively affected by discrimination among high‐skilled workers. ( JEL J15, J31, J61, J64, J71)