A theory of the value of discrimination in the job market as a function of the business cycle, based on elementary models of economic behavior in which, among other things, employer uncertainty about employee capacity to produce is incorporated. A favorable economic environment is assumed to induce employers to engage in hiring experiments, which, if they prove favorable, may eliminate race as a screening device when labor markets become less tight. If valid, the hypothesis implies that discrimination by employers--and by the nonwhite poor in their job search--is explicable on purely economic grounds and that a tight labor market could cause both groups to alter beliefs that give rise to discriminatory practices.
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