Working Paper: CEPR ID: DP9953
Authors: Morten Hedegaard; Jean-Robert Tyran
Abstract: We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination.
Keywords: discrimination; field experiment; labor market
JEL Codes: C93; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cost of discrimination (J71) | Probability of discrimination (J71) |
| Price of discrimination (J71) | Probability of discrimination (J71) |
| Price of discrimination (J71) | Elasticity of discrimination (J71) |
| Animus-driven and belief-driven prejudice (J15) | Gap between actual and predicted outcomes under accurate statistical discrimination (ASD) (J79) |
| Ethnic composition of teams (J15) | Productivity (O49) |