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Published July 2021 | Submitted
Journal Article Open

A Characterisation of 'Phelpsian' Statistical Discrimination


We establish that a type of statistical discrimination—that based on informativeness of signals about workers' skills and the ability appropriately to match workers to tasks—is possible if and only if it is impossible uniquely to identify the signal structure observed by an employer from a realised empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent, remuneration for workers. Finally, we connect the statistical discrimination literature to Bayesian persuasion, establishing that if discrimination is absent, then the optimal signalling problem results in a linear pay-off function (as well as a kind of converse).

Additional Information

© 2020 Royal Economic Society. Published by Oxford University Press. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model). Received: 16 May 2019; Accepted: 17 August 2020; Published: 29 August 2020. Echenique thanks the NSF for support through the grants SES-1558757 and CNS-1518941. We are grateful to Leeat Yariv for comments on a previous draft.

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August 20, 2023
October 23, 2023