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Wages, Employment, And Statistical Discrimination: Evidence From The Laboratory

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  • DAVID L. DICKINSON
  • RONALD L. OAXACA

Abstract

type="main" xml:id="ecin12103-abs-0001"> We report results from laboratory experiments designed to examine statistical discrimination. Our design expands upon existing research by generating data both on wage contracts and unemployment rates of directly competing worker groups. We find some evidence for statistical wage discrimination against workers having an identical expected productivity but a higher productivity variance. However, those same subjects are less likely to be unemployed, suggesting that our employer-subjects view hiring choice and wage contracts as substitutable. A clear implication is that field data discrimination estimates based on wages alone may overestimate the true impact of such discrimination. ( JEL C90, J71)

Suggested Citation

  • David L. Dickinson & Ronald L. Oaxaca, 2014. "Wages, Employment, And Statistical Discrimination: Evidence From The Laboratory," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1380-1391, October.
  • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:4:p:1380-1391
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    References listed on IDEAS

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    1. Davis, Douglas D., 1987. "Maximal quality selection and discrimination in employment," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 97-112, March.
    2. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination in a Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 351-377.
    3. David W. Harless & George E. Hoffer, 2002. "Do Women Pay More for New Vehicles? Evidence from Transaction Price Data," American Economic Review, American Economic Association, vol. 92(1), pages 270-279, March.
    4. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    5. David L. Dickinson & Ronald L. Oaxaca, 2009. "Statistical Discrimination in Labor Markets: An Experimental Analysis," Southern Economic Journal, Southern Economic Association, vol. 76(1), pages 16-31, July.
    6. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    7. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
    8. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 49-89.
    9. Oaxaca, Ronald L. & Geisler, Iris, 2003. "Fixed effects models with time invariant variables: a theoretical note," Economics Letters, Elsevier, vol. 80(3), pages 373-377, September.
    10. 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 304-321, June.
    11. Goldberg, Pinelopi Koujianou, 1996. "Dealer Price Discrimination in New Car Purchases: Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 622-654, June.
    12. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical Theories of Discrimination in Labor Markets," ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
    13. Helen F. Ladd, 1998. "Evidence on Discrimination in Mortgage Lending," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 41-62, Spring.
    14. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-571, June.
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    Citations

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    Cited by:

    1. Baert, Stijn, 2015. "Hiring a Homosexual, Taking a Risk? A Lab Experiment on Employment Discrimination and Risk Aversion," IZA Discussion Papers 9536, Institute of Labor Economics (IZA).
    2. Dickinson, David L. & Masclet, David & Peterle, Emmanuel, 2018. "Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market," European Economic Review, Elsevier, vol. 104(C), pages 220-236.
    3. Ronald L. Oaxaca & David L. Dickinson, 2016. "Symmetric experimental designs: conditions for equivalence of panel data estimators," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 2(1), pages 85-95, May.
    4. Wozniak, David & MacNeill, Timothy, 2020. "Racial discrimination in the lab: Evidence of statistical and taste-based discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 85(C).
    5. Chen, Yiu Por (Vincent) & Zhang, Yuan, 2018. "A decomposition method on employment and wage discrimination and its application in urban China (2002–2013)," World Development, Elsevier, vol. 110(C), pages 1-12.

    More about this item

    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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