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In the case of statistical discrimination, wage gaps across two groups can arise because of: Differences in the average true ability of the groups Productivity

In the case of statistical discrimination, wage gaps across two groups can arise because of:

  • Differences in the average true ability of the groups
  • Productivity signals are that known to employers, even if true average ability is the same
  • Factors that do not relate to productivity of individuals, but that can cause prejudice on the part of employers
  • Differences in the weight given to the signal that relates to underlying ability

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