Early-Career Discrimination: Spiraling or Self-Correcting?

Organised by

• Department of Economics

Do workers from social groups with comparable productivity distributions obtain comparable lifetime earnings? We study how a small amount of early-career discrimination propagates over time when workers' productivity is revealed through employment. In breakdown learning environments that track primarily on-the-job failures, such discrimination spirals into a substantial lifetime earnings gap for groups of comparable productivity, whereas in breakthrough learning environments that track successes, early discrimination self-corrects so as to guarantee comparable lifetime earnings. This contrast is robust to large labor markets, flexible wages, inconclusive learning, investment in productivity, and mis-specified employers' beliefs.

Co-authors: Yingni Guo and Bruno Strulovici, Northwestern University