American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Price of Prejudice
American Economic Journal: Applied Economics
vol. 10,
no. 1, January 2018
(pp. 40–63)
(Complimentary)
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.Citation
Hedegaard, Morten Størling, and Jean-Robert Tyran. 2018. "The Price of Prejudice." American Economic Journal: Applied Economics, 10 (1): 40–63. DOI: 10.1257/app.20150241Additional Materials
JEL Classification
- C93 Field Experiments
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J71 Labor Discrimination
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