Self-Confidence, Social Identity, and Labor Market Inequality: Experimental Evidence From India

Abstract

We study the joint effect of self-confidence and social identity on labor market inequality in an experimental Indian labor market where employers and workers come from different castes. Employers evaluate resumes in order to predict future productivity of workers who perform a real effort task. The resumes in the control include a signal of productivity and caste information, while a measure of worker self-confidence is added in the treatment. After controlling for productivity signal, we find a discriminatory wage differential against lower caste workers in both treatments. While self-confidence strongly affects employer judgments for all workers, its impact for lower caste workers is about twice the effect for the higher caste workers. This differential treatment helps close the wage gap for the lower caste workers with high self-confidence . Our results suggest that interventions that target non-cognitive skills can be particularly effective for reducing identity-based labor market discrimination.