INFORMATION FLOWS AND DISCRIMINATION IN LABOR-MARKETS IN RURAL-AREAS IN DEVELOPING-COUNTRIES

A variety of implications of a pervasive labor market information problem-the inability of employers to perceive perfectly the skills of heterogeneous workers-are considered. The principal objective is to provide empirical evidence on the effects of imperfect information in order to achieve a better understanding of how workers are rewarded and to identify potential interventions that may reduce the costs associated with such problems. The emphasis is on the casual labor markets that characterize most rural areas of developing countries. Among the topics addressed are the informational assumptions of nutrition-wage theory; the processes by which employers learn about differences in worker capabilities and their implications for changes in wage inequality over the life cycle of workers; and worker mobility, information-based efficiency costs, and the identification of employer discrimination among workers on the basis of worker traits unrelated to employer-perceived productivity.