Work

Are Firms That Discriminate More Likely to Go Out of Business?

Year: 2016

Type: article

Abstract: Economic theory has long maintained that employers pay a price for engaging in racial discrimination. According to Gary Becker’s seminal work on this topic and the rich literature that followed, racial preferences unrelated to productivity are costly and, in a competitive market, should drive discriminatory employers out of business. Though a dominant theoretical proposition in the field of economics, this argument has never before been subjected to direct empirical scrutiny. This research pairs an experimental audit study of racial discrimination in employment with an employer database capturing information on establishment survival, examining the relationship between observed discrimination and firm longevity. Results suggest that employers who engage in hiring discrimination are less likely to remain in business six years later.

Source: Sociological Science

DOI: 10.15195/v3.a36

Author: Devah Pager

Institution: Harvard University

Language: English

Topic: Names, Identity, and Discrimination Research

Subfield: Sociology and Political Science

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, Reduced inequalities

Open Access status: gold

Estimated APC paid: $575