So basically they suggest a policy dictating what an employer can and can’t do with his private property?
if they are fixing prices, by raising the wage rates of ‘dagger workers’ to parity with ‘star workers’ even when there is a entrepeneurial risk greater for dagger than star, that makes dagger less attractive to employ than star then they are setting them up for increased unemployment are they not?, hurray! also how could the government claim knowledge over what the employer ‘considered’ when offering someone a job at some wage.
you considered his ethnicity!
no i didnt !
yes you did!
etc.
The paper uses the example of a test score as a qualification. Just to keep things simple, blacks and whites should have an equal chance to get hired if they have the same test score. A more qualified person will be hired regardless of his group status, Members of the two groups with the same qualifications are equally attractive, and social and private incentives are one and the same. That’s what makes it more efficient.
yes, but the test scores arent so reliable for the blacks as for the whites, which is the sole reason that a given a black and white candidate of equal test score, the rational entrepeneur would offer fractionally lower wages, or shorter term of contract to the black than the white, or if its the same wage and contract would simply hire the white than the black since there is really a greater likelihood of having picked the better candidate, and this is implicit in the way the scenario was constricted. given a black and white candidate of equal scoring,purchasing the labour of the black and turning down the white is (given the premise) objectively increasing the risk of ‘wrong purchase’
in order to inject some levity into this thread.
check out another pdf with the names lundberg and startz on it
http://www.econ.washington.edu/user/startz/Working_Papers/srobonaCSWEP.pdf
there is this comment:
I first consulted with a female senior colleague,
which I have learned over the years is a wise idea when gender issues arise.
he is gender biased about deferring to someone of a particular gender when issues of proper conduct regarding gender discrimination arise.
wow!
That’s not really the problem though. The situation at first isn’t really discriminatory, because on average workers are getting paid the same, so in that sense you are correct. The real issue is when the labor market changes because people adjust their human capital investments, so that eventually, on average workers are not getting paid the same. The imperfect information has created a discriminatory situation, this is not ideal because a policy of group-blind compensation would easily fix this…
im sorry juma, that sounds like nonsense. can you think of a different way to explain it to me?
why would the labour market change so that entrepeneurs got stupider about figuring out who are productive workers and who arent? and can the state do better than the entrepeneurs at evaluating how good a worker someone would be if an entrepeneur that didnt believe it was forced to give them a chance?
Here’s what they are saying, they can explain better than I:
In this paper we recognize that human capital investment decisions will be affected by the presence of labor market discrimination and model this dependence explicitly. If wages are based on the results of an imperfect test, the returns to an investment in skills which cannot be directly observed are reduced. The result is a suboptimal level of human capital which will vary over groups if the quality of testing varies. We show in what follows that equilibrium allocations under this type of imperfect information are discriminatory and can be improved by such simple forms of labor market intervention as enforcing group-blind compensation rules.4
why not suggest better tests? why do something ridiculous like assume that the productivity of two people are the same, even when the evidence is lacking that it is, i.e. the evidence is that the test scores for 1 are way more reliable than test scores for 2?
there is a pretence to knowledge that the state can know better than entrepeneurs what wages people should get. absurd.
Juma, I’ve tried to understand what your saying. So basically your saying “test scores” will dictate who the business owner hires? And those tests can be biased. Well, the business owner will just get the kind of results the business owner practices. If those “test scores” make the business productive, then those tests are helping business quite possibly. If they are hurting business in the long or short run (at whichever time the business figures out the tests are hurting rather than helping business), then the business would most likely stop using those kinds of tests and either rid the tests in total or find better tests advertised in the market to use.
So your argument seem to boil down to this:
1- Unless the business doesn’t mind losing productivity just to keep those tests, meaning the business would rather prioritize tests over productivity… really?
2 - Are you really going to say next that a black man or woman or the female gender (in general) is genetically, thus, inherently less productive? Thus the State needs to mandate them into businesses for they wouldn’t be able to market these so-called less qualified skills stemming from their biological roots that disqualify them due to these genetics? A State therefore has to step in to crutch this biological handicap that is no fault of their own? Really?
NOT RACISM!?!!