Tag Archives | Firm Survival

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

Devah Pager

Sociological Science, September 19, 2016
DOI 10.15195/v3.a36

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.

Creative Commons LicenseThis work is licensed under a Creative Commons Attribution 4.0 International License.
Devah Pager: Department of Sociology & Public Policy, Harvard University
Email: devah_pager@harvard.edu

Acknowledgements: Direct all correspondence to Devah Pager, Department of Sociology, Harvard University, Cambridge, MA 02138, devah_pager@harvard.edu. The author is thankful for feedback from David Neumark, Larry Katz, Jeff Liebman, Ilyana Kuziemko, Bruce Western, and Mitchell Duneier. This research was supported by grants from NSF (CAREER0547810) and NIH (1K01HD053694).

  • Citation: Pager, Devah. 2016. “Are Firms That Discriminate More Likely to Go Out of Business?” Sociological Science 3: 849-859.
  • Received: June 29, 2016
  • Accepted: July 11, 2016
  • Editors: Jesper Sørensen, Kim Weeden
  • DOI: 10.15195/v3.a36