We study a general equilibrium model with endogenous human capital formation in which ante identical groups may be treated asymmetrically in equilibrium. The interaction an informational externality and general equilibrium effects creates incentives for to specialize. Discrimination may arise even if the corresponding model with a single has a unique equilibrium. The dominant group gains from discrimination, rationalizing a majority may be reluctant to eliminate discrimination. The model is also consistent with‘‘reverse discrimination’’ as a remedy against discrimination since it may be necessary to the welfare of the dominant group to achieve parity.
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Moro et al. (2004) studied this question.
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