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The Price of Prejudice

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  • Tyran, Jean-Robert
  • Hedegaard, Morten

Abstract

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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  • Tyran, Jean-Robert & Hedegaard, Morten, 2014. "The Price of Prejudice," CEPR Discussion Papers 9953, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9953
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    3. Halla, Martin & Kah, Christopher & Sausgruber, Rupert, 2021. "Testing for Ethnic Discrimination in Outpatient Health Care: Evidence from a Field Experiment in Germany," Department of Economics Working Paper Series 319, WU Vienna University of Economics and Business.
    4. Lange, Andreas & Miniesy, Rania & Nicklisch, Andreas & Rabie, Dina & Bock, Olaf & Ross, Johannes, 2023. "Sharing norms and negotiations across cultures: Experimental interactions within and between Egypt and Germany," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 412-440.
    5. Ayaita, Adam, 2021. "Labor Market Discrimination and Statistical Differences in Unobserved Characteristics of Applicants," EconStor Preprints 236615, ZBW - Leibniz Information Centre for Economics.
    6. Hou, Yue & Liu, Chuyu & Crabtree, Charles, 2020. "Anti-muslim bias in the Chinese labor market," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 235-250.
    7. Marius Brülhart & Gian-Paolo Klinke & Andrea Marcucci & Dominic Rohner & Mathias Thoenig, 2023. "Price and Prejudice: Housing Rents Reveal Racial Animus," CESifo Working Paper Series 10369, CESifo.
    8. Lippens, Louis & Baert, Stijn & Derous, Eva, 2021. "Loss aversion in taste-based employee discrimination: Evidence from a choice experiment," Economics Letters, Elsevier, vol. 208(C).
    9. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Other publications TiSEM a5e6e0cd-5e07-4a24-a15c-a, Tilburg University, School of Economics and Management.
    10. Bajzíková, Stanislava & Cingl, Lubomír, 2023. "Measuring stereotypes in effort tasks: A multiple-price list approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    11. Élisabeth Tovar & Matthieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Working Papers hal-04141860, HAL.
    12. Broockman, David E. & Soltas, Evan J., 2020. "A natural experiment on discrimination in elections," Journal of Public Economics, Elsevier, vol. 188(C).
    13. Batsaikhan, Mongoljin & Gørtz, Mette & Kennes, John & Lyng, Ran Sun & Monte, Daniel & Tumennasan, Norovsambuu, 2021. "Discrimination and Daycare Choice: Evidence from a Randomized Survey," IZA Discussion Papers 14874, Institute of Labor Economics (IZA).
    14. Elena Cettolin & Sigrid Suetens, 2019. "Return on Trust is Lower for Immigrants," The Economic Journal, Royal Economic Society, vol. 129(621), pages 1992-2009.
    15. Doerrenberg, Philipp & Duncan, Denvil & Li, Danyang, 2024. "The (in)visible hand: Do workers discriminate against employers?," Journal of Public Economics, Elsevier, vol. 231(C).
    16. Elisabeth Tovar & Mathieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Post-Print hal-02459378, HAL.
    17. Gallen, Yana & Wasserman, Melanie, 2023. "Does information affect homophily?," Journal of Public Economics, Elsevier, vol. 222(C).
    18. Kertesi, Gábor & Köllő, János & Szabó, Lajos Tamás & Károlyi, Róbert, 2022. "Hogyan lesz az etnikai előítéletből foglalkoztatási diszkrimináció? A kisvállalatok szerepe [How does ethnic prejudice turn into employment discrimination? The role of small companies]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1345-1376.
    19. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Discussion Paper 2023-013, Tilburg University, Center for Economic Research.
    20. Chen Liang & Jing Peng & Yili Hong & Bin Gu, 2023. "The Hidden Costs and Benefits of Monitoring in the Gig Economy," Information Systems Research, INFORMS, vol. 34(1), pages 297-318, March.
    21. Mongoljin Batsaikhan & Mette Gørtz & John Kennes & Ran Sun Lyng & Daniel Monte & Norovsambuu Tumennasan, 2019. "Daycare Choice and Ethnic Diversity: Evidence from a Randomized Survey," Economics Working Papers 2019-02, Department of Economics and Business Economics, Aarhus University.
    22. Emma von Essen & Jonas Karlsson, 2019. "The effect of competition on discrimination in online markets—Anonymity and selection," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-18, August.
    23. Ilić, Dragan, 2018. "Prejudice in naturalization decisions: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 1-18.
    24. Élisabeth Tovar & Matthieu Bunel, 2021. "Attitudes on past-in-present educational discrimination. Insights from a representative factorial survey," EconomiX Working Papers 2021-28, University of Paris Nanterre, EconomiX.
    25. Schütt, Christoph A. & Pipke, David & Detlefsen, Lena & Grimalda, Gianluca, 2023. "Does ethnic heterogeneity decrease workers’ effort in the presence of income redistribution? An experimental analysis," European Journal of Political Economy, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Discrimination; Field experiment; Labor market;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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