CFDP Revision Date
The Invisibility Hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers, but that promotion enhances visibility and alleviates this problem. Then, at a competitive labor market equilibrium, ﬁrms proﬁt by hiding talented disadvantaged workers in low level jobs. Consequently, those workers are paid less on average and promoted less often than others with the same education and ability. As a result of the ineﬀicient and discriminatory wage and promotion policies, disadvantaged workers experience lower returns to investments in human capital than other workers.
Milgrom, Paul R. and Oster, Sharon, "Job Discrimination, Market Forces and the Invisibility Hypothesis" (1984). Cowles Foundation Discussion Papers. 943.