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Statistical Discrimination in Labor Markets: An Experimental Analysis

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Author Info
David L. Dickinson () (Department of Economics, Appalachian State University, Boone, NC 28607, USA)
Ronald L. Oaxaca () (Department of Economics, University of Arizona, Tucson, AZ 85721-0108, USA)

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Abstract

This article reports results from controlled laboratory experiments designed to study secondmoment (that is, risk-based) statistical discrimination in a labor market setting. Since decision makers may not view risk in the same way as economists or statisticians (that is, risk 5 variance of distribution), we also examine alternative measures of risk: the support of the distribution and the probability of earning less than the expected (maximum) profits for the employer. Our results indicate that employers made statistically discriminatory wage offers consistent with loss aversion in our full sample (though the result is driven by the male employer subsample). If one can transfer these results outside of the laboratory, they indicate that discrimination estimates based only on first-moment (mean-based) discrimination are biased. The public policy implication is that efforts and legislation aimed at reducing discrimination of various sorts face an additional challenge in trying to identify and limit relatively hidden, but significant, forms of statistical discrimination.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 76 (2009)
Issue (Month): 1 (July)
Pages: 16-31
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Handle: RePEc:sej:ancoec:v:76:1:y:2009:p:16-31

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Find related papers by JEL classification:
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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  6. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 49-89, February. [Downloadable!] (restricted)
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  12. Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-21, June. [Downloadable!] (restricted)
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