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The Price of Prejudice

  • Hedegaard, Morten
  • Tyran, Jean-Robert

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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9953.

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Date of creation: Apr 2014
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Handle: RePEc:cpr:ceprdp:9953
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  17. Philip Oreopoulos, 2011. "Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 148-71, November.
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  26. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are emily and greg more employable than lakisha and jamal? A field experiment on labor market discrimination," Natural Field Experiments 00216, The Field Experiments Website.
  27. Jeffrey Grogger, 2011. "Speech Patterns and Racial Wage Inequality," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 1-25.
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