DISCRIMINATION AND JOB-UNCERTAINTY

In this paper I incorporate group behaviour into a model of the labour market and show that discrimination can be the result of competition between coalitions of workers and bosses for jobs. If the probability of correctly assessing the productivity of individual workers decrease s, coalition formation on the basis of recognisable characteristics be comes relatively more rewarding than coalition forming on the basis of productivity. The conditions are under which each individual in the e ndogeneously defined group actively discriminates persons with differe nt recognisable characteristics, independent of productivity. (C) 1998 Elsevier Science B.V. All rights reserved. JEL classification: C72; C 73; D74; 361; 571.