Adverse Selection in Team Formation under Discrimination

A model of adverse selection when teams form endogenously highlights the rela-tionship between discrimination and occupational choice. It shows discrimination can persist even when management allocates credit fairly, if worker beliefs about discrim-ination inuence their decision to engage in teamwork. Furthermore, among those choosing to work as entrepreneurs or in other individualistic occupations, discrimina-tion victims outperform bene\u85ciaries.