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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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