A Political Economy of Social Discrimination

Dewan, Torun and Wolton, Stephane (2019): A Political Economy of Social Discrimination.

Abstract

From burqa ban to minaret ban, from right to detain suspected illegal immigrants to restricting the help to migrants, the number of social laws specifically targeting a tiny proportion of citizens has raised in recent years across Western democracies. These symbolic policies, we show, are far from being innocuous: they can have far reaching consequences for large parts of the population. By raising the salience of certain social traits (e.g., Muslim identity) these laws can create a labour market loaded in favor of the majority (e.g., the non-Muslims), yielding higher unemployment rates and spells for minority citizens. These deleterious effects arise even absent any form of bias against, or uncertainty about, minority workers. Instead they are fully driven by social expectations about behavior and are best understood as a form of social discrimination. Importantly, we establish conditions under which a plurality of the citizenry demands the implementation of symbolic policies anticipating their labor market consequences. We further highlight that the implementation of symbolic policies is always associated with less redistribution and can be coupled with lower tax rates. We discuss several policy recommendations to limit the possibility of social discrimination arising.

• Item Type: MPRA Paper
• Language: English
• Keywords: burqa, minority, redistribution, identity politics
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D70 - General; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; J - Labor and Demographic Economics > J7 - Labor Discrimination > J70 - General; J - Labor and Demographic Economics > J7 - Labor Discrimination > J71 - Discrimination; J - Labor and Demographic Economics > J7 - Labor Discrimination > J78 - Public Policy

References

Abdelgadir, A., and V. Fouka (2019) "Secular Policies and Muslim Integration in the West: The Effects of the French Headscarf Ban," Stanford Working Paper.

Adida, C. L., D. D. Laitin, and M.-A. Valfort (2016) Why Muslim integration fails in Christian-heritage societies. Harvard University Press.

Akerlof, G. (1976) "The economics of caste and of the rat race and other woeful tales," The Quarterly Journal of Economics, pp. 599-617.

Akerlof, G. A., and R. E. Kranton (2000) "Economics and identity," The Quarterly Journal of Economics, 115(3), 715-753.

Akerlof, G. A., and R. E. Kranton (2010) Identity Economics: How Identities Shape Our Work, Wages, and Well-Being, Princeton, NJ: Princeton University Press.

Alt, J., and T. Iversen (2017) "Inequality, Labor Market Segmentation, and Preferences for Redistribution," American Journal of Political Science, 61(1), 21-36.

Appiah, K. A. (2018): The Lies That Bind: Rethinking Identity. Pro�le Books.

Arrow, K., et al. (1973) "The theory of discrimination," Discrimination in labor markets, 3(10), 3-33.

Austen-Smith, D., and R. G. Fryer Jr (2005) "An economic analysis of acting white," The Quarterly Journal of Economics, 120(2), 551-583.

Basu, K. (2005) "Racial conflict and the malignancy of identity," The Journal of Economic Inequality, 3(3), 221-241.

Becker, G. S. (2010) The economics of discrimination, 2nd edition. University of Chicago press.

Bisin, A., E. Patacchini, T. Verdier, and Y. Zenou (2016) "Bend it like Beckham: Ethnic identity and integration," European Economic Review, 90, 146-164.

Bramoulle, Y., and S. Goyal (2016) "Favoritism," Journal of Development Economics, 122, 16-27.

Carvalho, J.-P. (2012) "Veiling," The Quarterly Journal of Economics, 128(1), 337-370.

Cavounidis, C., and K. Lang (2015) "Discrimination and worker evaluation," National Bureau of Economic Research Working Paper, No. 21612.

Choy, J. P. (2017) "Social Division with Endogenous Hierarchy," The Economic Journal, 128(615), 2711-2742.

Dancygier, R. M. (2010) Immigration and con ict in Europe. Cambridge University Press.

Dancygier, R. M. (2017): Dilemmas of inclusion: Muslims in European politics. Princeton University Press.

Daskalova, V. (2018) "Discrimination, social identity, and coordination: An experiment," Games and Economic Behavior, 107, 238-252.

Eeckhout, J. (2006) "Minorities and endogenous segregation," The Review of Economic Studies, 73(1), 31-53.

Eguia, J. X. (2017) "Discrimination and assimilation at school," Journal of Public Economics, 156, 48-58.

European Commission (2008) "Conclusions and Recommendations of the European Commission's Network Ethnic Minority Businesses."

Fearon, J. D., and D. D. Laitin (2000) "Violence and the Social Construction of Identity," International Organization, 4(54), 845-877.

Fernandez, R., and G. Levy (2008) "Diversity and redistribution," Journal of public economics, 92(5-6), 925-943.

Fershtman, C., and U. Gneezy (2001) "Discrimination in a segmented society: An experimental approach," The Quarterly Journal of Economics, 116(1), 351-377.

Fouka, V. (2019a) "Backlash: the unintended effects of language prohibition in US schools after World War I," Review of Economic Studies, forthcoming.

Fouka V. (2019b) "How do immigrants respond to discrimination? The case of Germans in the US during World War I," American Political Science Review, 113(2), 405-422.

Glover, D. (2019) "Job Search and Intermediation under Discrimination: Evidence from Terrorist Attacks in France," Chaire Securisation des Parcours Professionels Working Paper, (2019-02).

Glover, D., A. Pallais, and W. Pariente (2017) "Discrimination as a self-ful�lling prophecy: Evidence from French grocery stores," The Quarterly Journal of Economics, 132(3), 1219-1260.

Gneezy, U., J. List, and M. K. Price (2012) "Toward an understanding of why people discriminate: Evidence from a series of natural �eld experiments," Discussion paper.

Grossman, G. M., and E. Helpman (2018) "Identity Politics and Trade Policy," National Bureau of Economic Research Working Paper, No. 25348.

Harbaugh, R., and T. To (2014) "Opportunistic discrimination," European Economic Review, 66, 192-204.

Huber, J. D. (2017) Exclusion by elections: inequality, ethnic identity, and democracy. Cambridge University Press.

Kamphorst, J. J., and O. H. Swank (2016) "Don't demotivate, discriminate," American Economic Journal: Microeconomics, 8(1), 140-65.

Krasa, S., and M. Polborn (2014) "Social ideology and taxes in a differentiated candidates framework," American Economic Review, 104(1), 308-22.

Landa, D., and D. Duell (2015) "Social identity and electoral accountability," American Journal of Political Science, 59(3), 671-689.

Levy, G. (2004) "A model of political parties," Journal of Economic theory, 115(2), 250-277.

Matakos, K., and D. Xefteris (2017) "Divide and rule: redistribution in a model with differentiated candidates," Economic Theory, 63(4), 867-902.

Matakos, K., and D. Xefteris (2019) "Class vs. Identity: The Effect of Candidates Race on the Inequality-Redistribution Nexus," Working Paper.

Penn, E. M. (2008) "Citizenship versus ethnicity: The role of institutions in shaping identity choice," The Journal of Politics, 70(4), 956-973.

Peski, M., and B. Szentes (2013) "Spontaneous discrimination," American Economic Review, 103(6), 2412-36.

Phelps, E. S. (1972) "The statistical theory of racism and sexism," The american economic review, 659-661.

Ram, M., and T. Jones (2008) Ethnic Minorities in Business. SERTeam.

Ramachandran, R., and C. Rauh (2013) "Discrimination without Taste-How Discrimination can spillover and persist," Working Paper.

Rosen, A. (1997) "An equilibrium search-matching model of discrimination," European Economic Review, 41(8), 1589-1613.

Rzepnikowska, A. (2019) "Racism and xenophobia experienced by Polish migrants in the UK before and after Brexit vote," Journal of Ethnic and Migration Studies, 45(1), 61-77.

Schnakenberg, K. E."Group Identity and Symbolic Political Behavior." Quarterly Journal of Political Science, 9(2014), 137{167.

Shayo, M. (2009) "A model of social identity with an application to political economy: Nation, class, and redistribution," American Political science review, 103(2), 147-174.

Zussman, A. (2013) "Ethnic discrimination: Lessons from the Israeli online market for used cars," The Economic Journal, 123(572), F433-F468.