1. The Price of Prejudice
- Author
-
Morten Hedegaard and Jean-Robert Tyran
- Subjects
jel:C93 ,Labour economics ,Opportunity cost ,Earnings ,05 social sciences ,Ethnic group ,jel:J71 ,Field experiment, discrimination, labor market ,0502 economics and business ,Economics ,Ethnic discrimination ,050207 economics ,General Economics, Econometrics and Finance ,Statistical discrimination ,Prejudice (legal term) ,050205 econometrics - 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 highly responsive to the “price of prejudice,” i.e., to the opportunity cost of choosing a less productive worker on ethnic grounds. Discriminators are on average willing to forego 8 percent of their earnings to avoid a coworker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior. (JEL C93, J15, J24, J31, J71)
- Published
- 2018