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Are Reports of Discrimination Valid? Considering the Moral Hazard Effect
Author(s) -
Coleman Major G.,
Darity Jr. William A.,
Sharpe Rhonda V.
Publication year - 2008
Publication title -
american journal of economics and sociology
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.199
H-Index - 38
eISSN - 1536-7150
pISSN - 0002-9246
DOI - 10.1111/j.1536-7150.2008.00566.x
Subject(s) - moral hazard , promotion (chess) , wage , human capital , race (biology) , hazard , inequality , labour economics , demographic economics , statistical discrimination , capital (architecture) , economics , sociology , political science , law , incentive , economic growth , gender studies , geography , archaeology , mathematical analysis , chemistry , mathematics , organic chemistry , politics , microeconomics
A bstract . Antidiscrimination laws are designed to prompt employers to stop excluding black workers from jobs they offer and from treating them unequally with respect to promotion and salaries once on the job. However, a moral hazard effect can arise if the existence of the laws leads black employees to bring unjustified claims of discrimination against employers. It has been argued that employers may become more reluctant to hire black workers for fear of being subjected to frivolous lawsuits. Using the Multi‐City Study of Urban Inequality (MCSUI), we find that male and female black workers are far more likely than whites to report racial discrimination at work. This is the case even when a host of human capital and labor market factors are controlled for. Further, nearly all black workers who report they have been discriminated against on the job in the MCSUI Surveys also show statistical evidence of wage discrimination. This is not the case for white males or females. We find little evidence to support a moral hazard effect.