The Price of Prejudice

55 Pages Posted: 30 Apr 2014

See all articles by Morten Hedegaard

Morten Hedegaard

Copenhagen University College - Department of Obstetrics; University of Copenhagen

Jean-Robert Tyran

University of Vienna; University of Copenhagen - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 1, 2014

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.

Keywords: Field experiment, discrimination, labor market

JEL Classification: C93, J71

Suggested Citation

Hedegaard, Morten and Hedegaard, Morten and Tyran, Jean-Robert, The Price of Prejudice (April 1, 2014). Univ. of Copenhagen Dept. of Economics Discussion Paper No. 14-09, Available at SSRN: https://ssrn.com/abstract=2430766 or http://dx.doi.org/10.2139/ssrn.2430766

Morten Hedegaard

Copenhagen University College - Department of Obstetrics ( email )

Copenhagen
Denmark

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Jean-Robert Tyran (Contact Author)

University of Vienna ( email )

Oskar-Morgenstern-Platz 1
Vienna, Vienna 1090
Austria

HOME PAGE: http://homepage.univie.ac.at/jean-robert.tyran/

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark
+45 353 23 027 (Phone)

HOME PAGE: http://www.econ.ku.dk/tyran/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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