North Korean refugees’ implicit bias against South Korea predicts market earnings

Abstract

This paper investigates whether experiences of living in a communist regime relate to low market earnings. We recruit North Korean refugees and measure their implicit bias against South Korea by using the Implicit Association Test. Conducting double auction and bilateral bargaining market experiments, we find that North Korean refugees with a larger bias against South Korea have lower expectations about their earning potential, exhibit trading behavior with lower target profits, and earn less profits. These associations are robust to conditioning on correlates of preferences, human capital, and assimilation experiences.