Discrimination in the Labour Market: The Curse of Competition between Workers

34 Pages Posted: 11 Aug 2017

See all articles by Thomas de Haan

Thomas de Haan

University of Amsterdam - Faculty of Economics and Business (FEB)

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE)

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB); Tinbergen Institute

Date Written: August 2017

Abstract

In an experiment we identify a crucial factor that determines whether employers engage in statistical discrimination of ex ante equal groups. In the standard no‐competition setup of Coate and Loury (1993), we do not find systematic evidence for statistical discrimination. When we introduce competition between workers of different groups for the same job, the non‐discrimination equilibrium ceases to be stable. In line with this theoretical observation, we find systematic discrimination in the experimental treatment with competition. Nevertheless, a substantial minority of the employers refuses to discriminate even when it is in their best interest to do so.

Suggested Citation

de Haan, Thomas and Offerman, Theo and Sloof, Randolph, Discrimination in the Labour Market: The Curse of Competition between Workers (August 2017). The Economic Journal, Vol. 127, Issue 603, pp. 1433-1466, 2017. Available at SSRN: https://ssrn.com/abstract=3016864 or http://dx.doi.org/10.1111/ecoj.12352

Thomas De Haan (Contact Author)

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4294 (Phone)
+31 20 525 5283 (Fax)

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 5241 (Phone)
+31 20 525 4310 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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