Hiring a Homosexual, Taking a Risk? A Lab Experiment on Employment Discrimination and Risk Aversion
23 Pages Posted: 29 Nov 2015
We investigate risk aversion as a driver of labour market discrimination against homosexual men. We show that more hiring discrimination by more risk-averse employers is consistent with taste-based and statistical discrimination. To test this hypothesis we conduct a scenario experiment in which experimental employers make a hiring decision concerning a heterosexual or homosexual job candidate. In addition, participants are surveyed on their risk aversion and other characteristics that might correlate with this risk aversion. Analysis of the (post-)experimental data confirms our hypothesis. The probability of a beneficial hiring decision for homosexual candidates decreases by 31.7% when employers are a standard deviation more risk-averse.
Keywords: hiring discrimination, statistical discrimination, sexual orientation, scenario experiment, risk aversion
JEL Classification: C91, J15, J71
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