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2017

Fairness at Equilibrium in the Labor Market

Hu, Lily, Chen, Yiling

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Recent literature on computational notions of fairness has been broadly divided into two distinct camps, supporting interventions that address either individual-based or group-based fairness.

Rather than privilege a single definition, we seek to resolve both within the particular domain of employment discrimination.
To this end, we construct a dual labor market model composed of a Temporary Labor Market, in which firm strategies are constrained to ensure group-level fairness, and a Permanent Labor Market, in which individual worker fairness is guaranteed.
We show that such restrictions on hiring practices induces an equilibrium that Pareto-dominates those arising from strategies that employ statistical discrimination or a "group-blind" criterion.

Fairness at Equilibrium in the Labor Market · Around

Built on

The statistical theory of racism and sexism
Edmund S Phelps · 1972
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Will affirmative-action policies eliminate negative stereotypes?
Stephen Coate and Glenn C Loury · 1993
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What has economics to say about racial discrimination?
Kenneth J Arrow · 1998
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The dynamics of collective reputation
Jonathan Levin et al · 2009
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