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Are Reports of Discrimination Valid? Considering the Moral Hazard Effect

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  • Major G. Coleman
  • William A. Darity Jr.
  • Rhonda V. Sharpe

Abstract

. Antidiscrimination laws are designed to prompt employers to stop excluding black workers from jobs they offer and from treating them unequally with respect to promotion and salaries once on the job. However, a moral hazard effect can arise if the existence of the laws leads black employees to bring unjustified claims of discrimination against employers. It has been argued that employers may become more reluctant to hire black workers for fear of being subjected to frivolous lawsuits. Using the Multi‐City Study of Urban Inequality (MCSUI), we find that male and female black workers are far more likely than whites to report racial discrimination at work. This is the case even when a host of human capital and labor market factors are controlled for. Further, nearly all black workers who report they have been discriminated against on the job in the MCSUI Surveys also show statistical evidence of wage discrimination. This is not the case for white males or females. We find little evidence to support a moral hazard effect.

Suggested Citation

  • Major G. Coleman & William A. Darity Jr. & Rhonda V. Sharpe, 2008. "Are Reports of Discrimination Valid? Considering the Moral Hazard Effect," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(2), pages 149-175, April.
    • Handle: RePEc:bla:ajecsc:v:67:y:2008:i:2:p:149-175
    DOI: 10.1111/j.1536-7150.2008.00566.x
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    References listed on IDEAS

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    Cited by:

    1. Hersch, Joni, 2011. "Skin color, physical appearance, and perceived discriminatory treatment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(5), pages 671-678.
    2. Kingston, Gillian & O'Connell, Philip J. & Kelly, Elish, 2013. "Ethnicity and Nationality in the Irish Labour Market: Evidence from the QNHS Equality Module," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT230, June.
    3. Nicholas Biddle & Monica Howlett & Boyd Hunter & Yin Paradies, 2013. "Labour market and other discrimination facing Indigenous Australians," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 16(1), pages 91-113.

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