We examine the impact of discrimination on labour market performance when workers are subject to a risk of losing skills during the experience of unemployment. Within a search and matching model, we show that all natives and immigrants are affected by discrimination. Discrimination in one sector has positive spillovers, inducing employment increases in the other sector. Discrimination may induce immigrants to train more or less than natives, depending on the sector where it is present. Welfare tends to be most negatively affected by discrimination among highproductivity workers.
|Place of Publication||Frederiksberg|
|Publisher||Copenhagen Business School, CBS|
|Number of pages||38|
|Publication status||Published - 20 Jul 2015|
|Series||Working Paper / Department of Economics. Copenhagen Business School|