Discrimination and Workers Expectations

The paper explores the role of workers expectations as an original ex-planation for the puzzling long run persistence of observed discrimination against some minorities in the labor market. A game of incomplete infor-mation is presented, showing that ex ante identical groups of workers may be characterized by unequal outcomes in equilibrium due to their differ-ent beliefs, even though discriminatory tastes and statistical discrimina-tion by employers have disappeared. Wrong beliefs of being discriminated against are self-conÞrming in this circumstance, being the ultimate cause of a lower percentage of promotions which supports these wrong beliefs