Reference no: EM132006720

Suppose that black workers and white workers are thought to be equally productive on average, but employers cannot perfectly observe the productivity of a given worker. In addition, suppose that employers know more about a worker's true productivity when the worker is a member of the employer's racial group. In other words, black employers have better information about the true productivity of black workers, and white employers have better information about the true productivity of white workers. According to the theory of statistical discrimination, if you are a low-skill black worker, would you rather work for a black employer or a white employer? Explain.