Employer Learning and Statistical Discrimination in the New Zealand Labour Market

Labour market Labour supply Discrimination New Zealand

Firms often statistically discriminate in order to lower the cost of recruiting. This behaviour creates different economic opportunities among equally able individuals. We use the New Zealand component of the 2006 Adult Literacy and Life Skills (ALL) survey to test whether statistical discrimination is a factor in wage setting and employment outcomes. We are interested in testing the following hypotheses: (1) whether employers statistically discriminate among potential workers on the basis of education, gender, ethnicity or immigration status, when facing uncertain productivity information, and (2) whether they learn to revise their judgments as new information is revealed. Overall, we find mixed evidence of statistical discrimination over education level and gender for New Zealand born Pakeha, against female Maori and with Asian and Pasifika female immigrants. Significant employer learning behaviour is also found within each group.

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