1

Report1

Ethnic Discrimination, the Structure of the Labour Market

and Economic Conditions: Regional and International

Comparisons

Author: Edvard Nergård Larsen, University of Oslo

1 This Report has been submitted to the EU Commission as Deliverable 3.3; The Growth, Equal Opportunities,

Migration and Markets (GEMM) project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 649255.

2

Contents

1 Introduction .................................................................................................................................... 2

2 Field Experiments on Ethnic Discrimination in the Labour Market ................................................ 3

3 Regional and International Comparisons ....................................................................................... 5

2 The Structure of the Labour market and Economic Conditions ..................................................... 6

3 Summary and Conclusions, Directions for GEMM WP3 ................................................................. 8

4 References .................................................................................................................................... 10

1 Introduction

Western European countries, with a rapidly ageing native population, face to an

increasing extent the challenge of successful socioeconomic integration and

incorporation of international migrants into the labour market (Alba, Sloan & Sperling,

2011). Succeeding in this process of integration is crucial not only for the well-being of

the migrants themselves, but also for the sustained growth of the economies of host

countries. As labour market incorporation is vital in the more general process of

integration or assimilation, potential barriers to entry for migrants become increasingly

important for scientific investigation. One such barrier to entry is ethnic discrimination

of minorities seeking access to the labour market. It is still important to consider that

“…there are many potential explanations why immigrants face particular difficulties in

integrating into the labour market […] some of these are linked with the fact that

immigrants have often acquired their qualifications and work experience in a very

different context and often also in a different language” (OECD, 2013). Still,

discrimination is a potential explanation for the remaining gaps in wages and

unemployment found between minority-groups and the majority when other

observable differences are controlled for. Ethnic discrimination is not only detrimental

to the individual well-being and integration of migrants, it is also inefficient from the

perspective of employers and the functioning of the labour market: If suitable

candidates are excluded from positions based on differential treatment due to certain

3

characteristics, i.e. ethnicity or religion, overall integration and economic growth is

harmed.

How does one study the extent and causes of ethnic discrimination in the labour

market? One possibility is to study self-reported discrimination, i.e. the subjective

experiences of members of a minority group in the labour market. This is typically done

through interviews or surveys, but the findings are potentially prone to bias (see

Keushnigg & Wolbring, 2016, p. 7-8). While providing important insight into the

subjective experiences of minority group members, this line of research does not

provide reliable estimates of the actual extent of discriminatory behaviour among

employers. A second possibility is to study macro-level labour market integration of

minority groups: comparing rates of employment, mean wages and educational

attainment. If no other observable factors are able to explain gaps in employment

between minority groups and the majority, the remaining differences are potentially the

result of discrimination. Still, this line of research does not rule out the possibility of

differing unobserved characteristics driving the results.

Finally, there is a growing empirical literature employing field experiments when

studying labour market discrimination. These experiments have the advantage of

providing reliable causal estimates of discriminatory behaviour among real-life

employers, but are limited in explaining the mechanisms producing discrimination. In

this report, I will review the empirical literature detailing ethnic discrimination in the

labour market, focusing on field experiments. Section two discusses and reviews the

field experimental methodology in general, while section three focuses on regional and

international comparisons of experimental studies. In section three, I discuss the

interplay between economic conditions, the structure of the labour market, and ethnic

discrimination. It is worth noting that ethnic discrimination can be defined in several

ways, but for this report, I will define it as differential treatment based on ethnicity or

perceived ethnic background.

2 Field Experiments on Ethnic Discrimination in the Labour Market

Field experiments seeking to uncover discriminatory practice in labour markets are

usually grouped into two main methodological approaches: Audit and correspondence

studies (for an overview, see Pager, 2007). Audit studies employ a matched pair of

4

actors, usually referred to as “testers”, who apply to and attend interviews for real

advertised positions. The testers are instructed, and their identities constructed, to be

as similar as possible on all observable characteristics except for the characteristic of

interest relating to discriminatory behaviour – e.g. ethnicity or skin colour. The

difference in outcomes of the interviews is thus interpreted to be a causal effect of this

single characteristic.

Correspondence studies, on the other hand, employ resumes and cover letters of

fictitious applicants applying for advertised vacancies – typically ending the experiment

once the candidates receive an invitation to a job interview. Ethnicity is signalled in

some way, typically through the name of the applicant – while all other elements of the

application and CV are kept constant. The relative difference in invitations for the

majority- and minority-background candidates, referred to as the call-back, is measured

and interpreted as stemming from discrimination alone (see Bertrand & Mullainathan,

2004 for a widely cited and clear illustration of the approach).

Compared to audit studies, correspondence studies allows for more careful matching of

each applicant on all observable characteristics, as only (typically) the name is varied.

Audit studies, on the other hand, rely on the testers themselves to be similar on all

observable characteristic except for the treatment variable. This is potentially a source

of bias, as testers may differ in ways that are difficult to detect, but potentially

influential in the interview process (for a more thorough critique of the audit method,

see Heckman, 1998). Correspondence tests eliminate this potential bias through only

having to rely on the application documents being similar. On the other hand, audit

studies are powerful in the sense that they allow for investigating not only the call-

backs, i.e. invitations to interviews, but also the actual offering of jobs to candidates.

While there is reason to believe the initial stage of recruitment, it is still valuable to be

able to follow through to actual job outcomes. If a correspondence study finds that call-

back rates between two groups are indistinguishable in a certain region or country, an

audit study could still potentially reveal a large amount of discrimination at the stage of

actual hiring. In addition, there are challenges related to signalling the actual treatment

condition of the experiment through text alone. As mentioned, names are typically used

to signal ethnic background or colour – but names also signal more than simply

ethnicity, such as socioeconomic background (Pager 2007, p. 11). Finally, it is important

to note the ethical challenges that researchers employing either audit or

correspondence studies face, as both methods rely on breaching the principle of

5

informed consent. Researchers employing these methods commonly argue that

deviating from this principle is a necessary evil in order to provide valid estimates on

discrimination, thus appealing to the notion that the potential gain of knowledge

outweighs the inconvenience imposed on employers (for a thorough discussion, see

Riach & Rich, 2004).

In the following sections, I will discuss particular studies, overviews, reviews and meta-

analyses of ethnic discrimination in the labour market, focusing mostly on

correspondence tests due to their prevalence. It is nonetheless important to keep in

mind that there is valuable insight from the numerous studies of self-reported

discrimination and studies based on macro-level observational data (see Paradies, 2006

for an overview of the former approach, and Heath & Cheung, 2007 for the latter). Due

to the aims of GEMM (WP3), this report will focus on experimental studies.

3 Regional and International Comparisons

The complexity of designing either audit- or correspondence studies leads to difficulties

in comparing results across countries or specific periods of time. Differing designs

makes direct comparisons difficult: Various occupations with various skill requirements

are usually investigated, and the qualifications of the applicants varies between studies.

There are several review- and meta-analysis papers detailing discrimination in general,

and particularly the use of field experiments (see OECD, 2013; Neumark, 2016;

Bertrand & Duflo, 2016; Riach & Rich, 2002 for examples), and in this section I will

review the overall findings of these overviews and meta-analyses.

In spite of the difficulties of directly comparing these studies, a recent meta-analysis

provided by Zschirnt & Ruedin (2016) provides a solid starting point for comparing

more generally the results of field experiments investigating ethnic discrimination in

the labour market. The authors analyse 738 correspondence tests from 34 studies

conducted within OECD countries between 1990 and 2015, they provide the following

conclusion: “The mean relative call-back rate is 1.55 at the study level […] This means

that minority applicants have to write around 50% more applications to be invited for a

job interview” (Zschirnt & Ruedin, 2016, p. 8). Despite the high figure, the authors also

underline the fact that most studies tend to investigate the most salient or historically

6

relevant minority group in their country of interest, which might lead to an

overestimate of the extent of discrimination. The highest estimate of the relative call-

back rate between minority- and majority-candidates (3.5) is found in France (Cediey &

Foroni, 2007), while the lowest estimate comes from the U.S, at 0.8 (Bendick et al,

1991). Note that a relative call-back rate of 1.0 implies equal treatment of minority- and

majority-group applicants. Even though different ethnic groups are investigated, some

general patterns can be observed: Rich (2014) finds convincing evidence of

discrimination against candidates of Middle Eastern origin in particular.

These findings also reflect the conclusions made in review papers summarizing the

experimental literature on ethnic discrimination:

The results of the field experiments are consistent with those emerging from the

self-report studies and statistical analysis of ethnic penalties. Regarding

employment, there is little doubt that discrimination against “visible” minorities

occurs in all countries, especially at the recruitment process (OECD 2013, p. 220).

Bertrand and Duflo (2016), in a recent review, stresses that while correspondence

studies have shown the differential treatment of minority groups to be “remarkably

pervasive”, there is a need for correspondence studies that go beyond pure

measurement and perhaps a lack of methodological innovation (p. 84). Thus, while the

general consensus appears to be that the existence of discrimination against minorities

is established, some gaps in the literature are commonly suggested as fruitful venues of

further research. Neumark (2016) argues that “More work is needed to pin down

compelling tests, and to replicate these across studies” (p. 79). In addition, when

discussing the limitations of correspondence and audit studies, there is little research

trying to understand or overcome these limitations. An interesting avenue of further

research is suggested by Midtbøen & Rogstad (2012), involving a combination of

qualitative follow-up interviews of employers involved in correspondence tests.

2 The Structure of the Labour market and Economic Conditions

While the field experiments described above are powerful tools in establishing the

extent of discriminatory practice, they do not necessarily provide information on how

discrimination varies by economic conditions and the structure of the labour market. In

order to assess these questions, comparison is required to some extent – either between

7

countries differing on key labour market characteristics, or within countries or regions

during periods of differing economic conditions. Still, some studies do attempt to shed

light on these dynamics, and I will in this section discuss ethnic discrimination in light of

economic conditions and labour market characteristics.

A central element of the potential interplay between economic conditions and ethnic

discrimination is the relationship between economic downturns, unemployment rates

and discriminatory practice. Is labour market tightness associated with higher levels of

ethnic discrimination, and is discrimination less prevalent in occupations where

vacancies are easier to fill? The reasoning behind this hypothesis is that if a vacancy is

difficult to fill, employers face greater risks by turning down minority candidates. If

they, on the other hand, have plenty of applicants to choose from, ethnicity might act as

a filtering condition when trying to narrow down their lists of candidate. Baert and

colleagues (2015) find evidence supporting this hypothesis, through a correspondence

study conducted in the Netherlands:

[…] applicants with a Turkish sounding name were no longer discriminated

against if they applied for occupations for which labour market tightness was

high. In contrast, if they applied for occupations for which there are plenty of

candidates, they had to send twice as many applications than candidates of

native origin to be invited to a job interview” (p. 20-21).

Other studies also underline the correlation between economic downturns and levels of

discrimination, which possibly relates to the findings discussed above. In periods of

high unemployment, i.e. periods where many candidates compete for the same jobs,

discrimination becomes increasingly prevalent. There is also evidence that

discrimination tends to be higher in low-skilled occupations than in high-skilled

occupations; Midtbøen (2016) and (Andriessen et al (2012) find the same tendency in

Norway and the Netherlands respectively, using correspondence tests where both low-

and high/medium-skilled occupations were applied to. Thus, these studies offer within-

country comparisons, but drawing general conclusions about the relationship between

ethnic discrimination and occupational skill-level would ideally require more

replication across countries as well. Still, integrating in particular low-skilled migrants

into the labour market remains crucial for many European countries (OECD, 2008), and

in turn, brings importance to the question discussed above. In addition to this, the

exclusionary effects of discrimination can further be reinforced by the fact that being

unemployed itself leads to differential treatment – potentially affecting minorities more

8

severely than majority candidates, thus creating a vicious cycle. For instance, Kroft and

colleagues (2013) find through a correspondence study that applicants with a history of

long-term unemployment were less likely to be invited to interviews. In addition, they

find that this effect is stronger in tighter labour markets. Additional evidence is found in

Eriksson & Rooths (2014) study from Sweden, where applicants who have currently

been unemployed for an extended period of time were less likely to receive call-backs.

Is there interplay between the negative effects of unemployment and the negative

effects of signalling ethnic minority status? Birkelund and colleagues (2016) investigate

this interplay through a two-part correspondence study in Norway, and finds that, while

both unemployment and minority status negatively affects call-back rates, the effect of

unemployment is no worse for minority-candidates relative to majority-candidates. In

other words, there are scarring effects of unemployment, but no clear evidence of a

particular ethnic scarring effect.

When discussing the relationship between labour market structures, economic

conditions and ethnic discrimination, it is also interesting to look at differences between

the private and the public sector – as the relative size of these sectors varies

considerably across countries. Midtbøen (2016), along with Wood and colleagues

(2009), finds small and statistically insignificant gaps in call-back rates between

minority- and majority candidates in the public sector, while the same gap is larger and

significant in the private sector. There are several potential explanation for these

observed differences; a higher degree of formalization in hiring processes in the public

sector may lead to less leeway for discriminatory practice, while at the same time, a

selection into the public sector of people with less inclination towards discrimination is

also a possible explanation (Midtbøen 2016, p. 267). The findings are perhaps

particularly interesting in the Norwegian context, due to its comparatively large public

sector, and thus underline the integrating potential of public sector jobs providing a

labour market entry-point for immigrants. More generally, the results relate to the

ongoing discussion about the relevance of integration contexts.

3 Summary and Conclusions, Directions for GEMM WP3

For the past 30 years, there has been a surge of experimental research seeking to reveal,

and potentially increase our understanding, of ethnic discrimination in labour markets.

From the evidence discussed in this report, ethnic discrimination of minorities appears

9

prevalent in nearly all labour markets where such studies have been conducted. Studies

employing correspondence and audit tests consistently report differential treatment

based on ethnicity, revolving around a mean relative call-back of around 1.5. This

entails that on average, minority candidates would need to submit 50% more

applications in order to receive the same amount of job interview invitations as an

equally qualified majority candidate. Discriminatory practice seems tied to economic

conditions and labour market tightness, indicated by higher measurements of

discrimination in occupations with a surplus of candidates, and conversely, lower rates

in occupations with vacancies that are difficult to fill. Some studies find evidence that

discrimination tends to be lower in the public sector than in the private sector, and that

discrimination tends to be higher in low-skilled occupations than in ones requiring

higher qualifications. While unemployment in itself reduces the probability of being

invited to job interviews, there does not seem to be a particular penalty for being

unemployed among minority candidates.

So far, these studies provide important insight in the form of mapping the extent of

discriminatory practices, but there is still a demand for research into the mechanisms

explaining the origins of these practices. While the existence, and to a certain degree the

extent, of ethnic discrimination is established, innovation is needed in order to shed

light on the mechanisms driving discrimination. In addition, although field experiments

on discrimination have been employed in many different countries and regions,

comparison is often difficult due to the variations in experimental designs. Future

research, like the correspondence study to be conducted as part of the GEMM project,

can potentially benefit greatly by using cross-national research designs allowing for

more robust international comparison. This also serves to overcome another issue

discussed above, namely that most experimental studies tend to focus on a specific

visible minority of interest to the host country in question. By comparing the same set of

multiple ethnic minority groups in several countries, light can be shed not only on the

amount of discrimination between countries, but also on how particular migrant groups

are perceived by different host countries.

Finally, the GEMM field experiment supplements the existing literature with innovation

through investigating multiple treatments that may influence ethnic discrimination. By

additionally varying characteristics such as the religious association of the applicants,

the skill-level and the degree of customer contact in the selected occupations, it is

possible to get closer to understanding the mechanisms driving discriminatory practice.

Thus, the WP3 field experiment has the potential to fill central gaps in the existing

10

literature, both by through its explicit comparative onset and its broad scope of

treatments.

4 References

Alba, R., Sloan, J., & Sperling, J. (2011). The Integration Imperative: The Children of Low-Status

Immigrants in the Schools of Wealthy Societies. Annual review of sociology, 37(1), 395-

415. doi:doi:10.1146/annurev-soc-081309-150219

11

Andriessen, I., Nievers, E., Dagevos, J., & Faulk, L. (2012). Ethnic Discrimination in the Dutch

Labor Market: Its Relationship With Job Characteristics and Multiple Group

Membership. Work and Occupations, 39(3), 237-269. doi:10.1177/0730888412444783

Baert, S., Cockx, B., Gheyle, N., & Vandamme, C. (2015). Is There Less Discrimination in

Occupations Where Recruitment Is Difficult? ILR Review.

doi:10.1177/0019793915570873

Bendick, M., Jackson, C. W., Reinoso, V. A., & Hodges, L. E. (1991). Discrimination against Latino

job applicants: A controlled experiment. Human Resource Management, 30(4), 469-484.

Bertrand, M., & Duflo, E. (2016). Field experiments on discrimination. Retrieved from

http://www.nber.org/papers/w22014

Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg More Employable Than Lakisha and

Jamal? A Field Experiment on Labor Market Discrimination. American Economic Review,

94(4), 991-1013. doi:doi: 10.1257/0002828042002561

Birkelund, G. E., Heggebø, K., & Rogstad, J. (2016). Additive or Multiplicative Disadvantage? The

Scarring Effects of Unemployment for Ethnic Minorities. European Sociological Review.

doi:10.1093/esr/jcw030

Cediey, E., & Foroni, F. (2007). Les discriminations à raison de “l’origine” dans les embauches en

France. Une enquête nationale par tests de discrimination selon la méthode du Bureau

International du Travail. Genève: Bureau International du Travail.

Eriksson, S., & Rooth, D.-O. (2014). Do Employers Use Unemployment as a Sorting Criterion

When Hiring? Evidence from a Field Experiment. American Economic Review, 104(3),

1014-1039. doi: 10.1257/aer.104.3.1014

Heath, A., & Cheung, S. Y. Unequal Chances: Ethnic Minorities in Western Labour Markets.

Proceedings of the British Academy, 137.

Heckman, J. J. (1998). Detecting Discrimination. The Journal of Economic Perspectives, 12(2),

101-116.

Keuschnigg, M. & Wolbring, T. (2016). The Use of Field Experiments to Study

Mechanisms of Discrimination. Analyse & Kritik, 38(1), pp. 179-202. Retrieved 19

Aug. 2016, from doi:10.1515/auk-2016-0109

12

Kroft, K., Lange, F., & Notowidigdo, M. J. (2013). Duration Dependence and Labor Market

Conditions: Evidence from a Field Experiment*. The Quarterly Journal of Economics.

doi:10.1093/qje/qjt015

Midtbøen, A. H. (2016). Discrimination of the second generation: Evidence from a field

experiment in Norway. Journal of International Migration and Integration, 17(1), 253-

272.

Midtbøen, A. H., & Rogstad, J. (2012). DISCRIMINATION. Methodological controversies and

sociological perspectives on future research. Nordic Journal of Migration Research, 2(3),

203-212.

Neumark, D. (2016). Experimental research on labor market discrimination. Retrieved from

OECD. (2008). Jobs for Immigrants (Vol. 2): Labour Market Integration in Belgium, France, the

Netherlands and Portugal. Paris: OECD Publishing.

OECD. (2013). Discrimination against immigrants – measurement, incidence

and policy instruments: OECD Publishing.

Pager, D. (2007). The Use of Field Experiments for Studies of Employment Discrimination:

Contributions, Critiques, and Directions for the Future. The Annals of the American

Academy of Political and Social Science, 609, 104-133.

Paradies, Y. (2006). A systematic review of empirical research on self-reported racism and

health. International Journal of Epidemiology, 35(4), 888-901. doi:10.1093/ije/dyl056

Riach, P. A., & Rich, J. (2002). Field experiments of discrimination in the market place*. The

economic journal, 112(483), F480-F518.

Riach, P. A., & Rich, J. (2004). Deceptive Field Experiments of Discrimination: Are they Ethical?

Kyklos, 57(3), 457-470. doi:10.1111/j.0023-5962.2004.00262.x

Rich, J. (2014). What Do Field Experiments of Discrimination in Markets Tell Us? A Meta

Analysis of Studies Conducted Since 2000. IZA Discussion Paper No. 8584.

Available at SSRN: http://ssrn.com/abstract=2517887

Wood, M., Hales, J., Purdon, S., Sejersen, T., & Hayllar, O. (2009). A test for racial discrimination

in recruitment practice in British cities. Department for Work and Pensions Research

Report, 607.

13

Zschirnt, E., & Ruedin, D. (2016). Ethnic discrimination in hiring decisions: a meta-analysis of

correspondence tests 1990–2015. Journal of Ethnic and Migration Studies, 42(7), 1115-

1134.