Statistical and taste-based discrimination in the labor market: an analysis of European Countries to identify optimal policy interventions

This study examines statistical and taste-based discrimination in European labor markets and identifies effective policy interventions. Statistical discrimination uses stereotypical assumptions to predict individual productivity based on available information when complete data is unavailable. Taste-based discrimination arises from personal biases rather than any economic rationale. The effectiveness of anti-discrimination policies hinges on the nature of discrimination, whether it is statistical, or taste based. To evaluate the depth and variations of discrimination, an index for decomposing discrimination is applied to data from a harmonized field experiment across five European countries, which is then compared with the Italian labor market. The findings underscore the substantial impact of taste-based discrimination, which frequently accounts for a significant portion of overall discrimination. This research offers valuable insights into the issue of discrimination in labor markets and proposes practical policy interventions to address both statistical and taste-based discrimination, thereby contributing to the creation of more inclusive and equitable labor markets.