Wage Announcements with a Continuum of Worker Types Kevin Lang Michael Manove Boston University February 3, 2003 Abstract: We present models of labor-market discrimination in which identical employers choose among job applicants according to a continuous characteristic such as skin color or worker height. The characteristic in question is assumed to be unrelated to worker productivity. Firms are required to announce wages that are not conditioned on the characteristic. Workers apply to firms on the basis of those announcements. Firms rank all applicants with respect to the characteristic and select the most desirable one. We show that in equilibrium all firms will offer the same wage, and workers will apply to each firm with equal probability. All employed workers will receive the same wage, but lower ranked workers will have a higher rate of unemployment than higher ranked workers and will thus have a lower expected income. These results differ from those of directed-search models characterized by a finite number of worker types. JEL classification:. Authors’ Addresses: Kevin Lang Michael Manove lang@bu.edu manove@bu.edu Dept. of Economics Boston University 270 Bay State Road Boston MA 02215 Acknowledgment: We would like to thank each other for all the good ideas that we developed in spite of the many vacuous and insipid comments of our colleagues.