Ulric B. and Evelyn L. Bray Social Sciences Seminar

Abstract: From burqa ban to minaret ban, from right to detain suspected illegal immigrants to restricting the help to migrants, the number of social laws specifically targeting minorities have raised in recent years across Western democracies. We show that these symbolic policies are far from innocuous: they can have dramatic consequences on the employment prospect and welfare of minorities. We study a political economy model where politicians compete by choosing a proportional tax rate, that is uniformly distributed, and policies that raise the salience of social identity before citizens interact on the labour market. Raising the salience of identity can lead to work discrimination affecting both the employment prospects and the duration of unemployment spells of workers with a minority identity. We further provide necessary and sufficient conditions for an equilibrium in which a plurality of the citizenry demands symbolic policy and thus indirectly support discrimination. We also highlight redistributive consequences: less transfers and (possibly) lower level of taxation. The minority thus suffers on several counts from such symbolic policy. She is less likely to be employed and receives less assistance when needing it the most. We discuss policy recommendations.