Do labour market conditions affect the extent of gender discrimination?

Abstract

The market environment in which discriminatory firms operate may be a relevant determinant of their extent of discrimination. In this paper we aim at analysing the effect of local labour market conditions on a firm’s decision to discriminate. We use a direct measure of discrimination using online job advertisements which use ascriptive characteristics (such as gender, age, marital status or even physique) to describe their ideal candidates, to which we will refer as explicit discrimination. In theory, the effect of the unemployment rate on discrimination is ambiguous. Using data from over 300,000 online job ads, we find suggestive, though not definitive, evidence that firms explicitly discriminate more when the unemployment rate is higher: a percentage point increase in the unemployment rate is correlated with a 0.7 percentage point increase in the probability that an ad is targeted. We also found that in slack labour markets, firms tend to target their ads to men more often than in tight labour markets. However, as the unemployment rate increases firms discriminate less on the basis of beauty.