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Customer Discrimination: Evidence from Israel

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  • Revital Bar
  • Asaf Zussman

Abstract

This paper studies customer discrimination against Arab workers in the Israeli market for labor-intensive services. Relying on surveys, field data, and a natural experiment, we provide evidence consistent with Becker’s customer discrimination model. First, a significant share of Jewish customers prefer to receive labor-intensive services from firms employing Jewish rather than Arab workers; these preferences are most strongly linked to concerns for personal safety. Second, customer preferences affect firms’ hiring decisions. Third, firms employing Arab workers charge significantly lower service prices than those employing only Jewish workers.

Suggested Citation

  • Revital Bar & Asaf Zussman, 2017. "Customer Discrimination: Evidence from Israel," Journal of Labor Economics, University of Chicago Press, vol. 35(4), pages 1031-1059.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/692510
    DOI: 10.1086/692510
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    Cited by:

    1. Diego Gentile Passaro & Fuhito Kojima & Bobak Pakzad-Hurson, 2023. "Equal Pay for Similar Work," Papers 2306.17111, arXiv.org.
    2. Sansani, Shahar, 2017. "Are the Religiously Observant Discriminated Against in the Rental Housing Market? Experimental Evidence from Israel," MPRA Paper 81424, University Library of Munich, Germany.
    3. Ayaita, Adam, 2021. "Labor Market Discrimination and Statistical Differences in Unobserved Characteristics of Applicants," EconStor Preprints 236615, ZBW - Leibniz Information Centre for Economics.
    4. Kasir, Nitsa Kaliner & Yashiv, Eran, 2020. "The Economic Outcomes of an Ethnic Minority: The Role of Barriers," IZA Discussion Papers 13120, Institute of Labor Economics (IZA).
    5. Marina Mileo Gorzig & Deborah Rho, 2022. "The effect of the 2016 United States presidential election on employment discrimination," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(1), pages 45-88, January.
    6. Daniel Aaronson & Brian J. Phelan, 2020. "The Evolution of Technological Substitution in Low-Wage Labor Markets," Working Paper Series WP-2020-16, Federal Reserve Bank of Chicago, revised 01 Mar 2022.
    7. Liat Ayalon, 2019. "Perceived Discrimination and Stigma in the Context of the Long-Term Care Insurance Law from the Perspectives of Arabs and the Jews in the North of Israel," IJERPH, MDPI, vol. 16(19), pages 1-17, September.
    8. Kapoor, Sacha & Magesan, Arvind, 2019. "Having it easy: Discrimination and specialization in the workplace," Journal of Economic Behavior & Organization, Elsevier, vol. 166(C), pages 153-173.
    9. Amegashie, J．Atsu, 2023. "Market segregation in the presence of customer discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    10. Rinne, Ulf & Sonnabend, Hendrik & Wolters, Leonie, 2023. "Customer Discrimination and Ethnic Team Composition," IZA Discussion Papers 16315, Institute of Labor Economics (IZA).
    11. Pramod Kumar Sur & Masaru Sasaki, 2020. "Measuring Customer Discrimination: Evidence From the Professional Cricket League in India," Journal of Sports Economics, , vol. 21(4), pages 420-448, May.
    12. Yashiv, Eran & Kasir (Kaliner), Nitsa, 2020. "The Economic Outcomes of an Ethnic Minority: the Role of Barriers," CEPR Discussion Papers 15151, C.E.P.R. Discussion Papers.
    13. Ayaita, Adam, 2023. "Ethnic Minority Background and Personality Characteristics: Evidence from a Representative Sample of the Adult Population," EconStor Preprints 251745, ZBW - Leibniz Information Centre for Economics, revised 2023.
    14. J. Atsu Amegashie, 2023. "Market Segregation in the Presence of Customer Discrimination," CESifo Working Paper Series 10453, CESifo.
    15. Elert, Niklas & Lundin, Erik, 2020. "Gender and Climate Action," Working Paper Series 1332, Research Institute of Industrial Economics, revised 18 Feb 2022.
    16. Campos-Vazquez, Raymundo M. & Gonzalez, Eva, 2020. "Obesity and hiring discrimination," Economics & Human Biology, Elsevier, vol. 37(C).
    17. Nitsa (Kaliner) Kasir & Eran Yashiv, 2020. "The Economic Outcomes of an Ethnic Minority: the Role of Barriers," RF Berlin - CReAM Discussion Paper Series 2011, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    18. Boyd-Swan, Casey & Herbst, Chris M., 2017. "Racial and Ethnic Discrimination in the Labor Market for Child Care Teachers," IZA Discussion Papers 11140, Institute of Labor Economics (IZA).
    19. Ahmed, Ali & Hammarstedt, Mats, 2018. "Customer Discrimination in the Fast Food Market? Experimental Evidence from a Swedish University Campus," Working Paper Series 1232, Research Institute of Industrial Economics.

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