What Happens When Employers are Free to Discriminate?
Research on employers’ hiring discrimination is limited by the unlawfulness of such activity. Consequently, researchers have focused on the intention to hire. Instead, we rely on a virtual labour market, the English Fantasy Football league, where employers can freely exercise their taste for racial discrimination in terms of hiring and firing. We find employers are less likely to hire black players than white players, even when accounting for time-varying player labour productivity and price. We are able to discount co-worker, consumer-based and statistical discrimination, thus isolating the effects of taste-based discrimination. However, there is no racial differential in employers' choice of their squad for the start of the season.