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Trial Title Does minimum wage affect ethnic hiring discrimination? Does the equal pay policy affect ethnic hiring discrimination?
Abstract In this experiment, we will experimentally examine the impact of minimum wage policy on employers’ hiring and wage decisions. We design a laboratory experiment where we will use reservation wage to stimulate the hoteling model (Hotelling, 1929) in order to introduce competition in hiring market. We consider different scenarios that vary the minimum wage that the employer must be offered: (i) no minimum wage; (ii) low minimum wage; (iii) high minimum wage. We will also compare these three difference scenarios between competitive market (where hiring competition exists) and non-competitive market (where hiring competition is absent). The experiment is designed to test three questions: (1) Whether and how minimum wage policy affects employers’ decisions toward ethnic majority and minority candidates differently; (2) Whether the impact on employers' decisions differs between a minimum wage and a much higher minimum wage; 3) whether the effects of minimum wages on employers' decisions differ between competitive and non-competitive labor markets. In this experiment, we will investigate the impact of an equal pay policy on hiring discrimination at different levels of competition in the labour market. We design a laboratory experiment where we will use reservation wage to stimulate the hoteling model (Hotelling, 1929) to introduce competition in the hiring market. We consider different scenarios for the hiring market: (i) No equal pay policy + no employer competition; (ii) Equal pay policy + no employer competition; iii) No equal pay policy + employer competition; iv) Equal pay policy + employer competition. The experiment is designed to test three questions: (1) Whether and how an equal pay policy affects employers’ decisions toward ethnic majority and minority candidates differently; (2) Whether employer competition affects employers' decisions with and without an equal pay policy.
Trial Start Date March 01, 2022 February 01, 2023
Last Published March 24, 2022 04:56 PM November 29, 2022 10:31 PM
Intervention (Public) 1) NC-Flexible (1): Employers can successfully hire a candidate as long as their wage offer is greater than the reservation wage. Employers can offer different wages to different candidates. 2) NC-Fixed (2): Employers can successfully hire a candidate as long as their wage offer is greater than the reservation wage. Employers can only offer an identical wage to all candidates they want to hire. 3) C-Flexible (3): Employers can successfully hire a candidate if 1) their wage offer is greater than the reservation wage, and 2) their wage offer is greater than their competitor. Employers can offer different wages to different candidates. 4) C-Fixed (4): Employers can successfully hire a candidate if 1) their wage offer is greater than the reservation wage, and 2) their wage offer is greater than their competitor. Employers can only offer an identical wage to all candidates they want to hire.
Intervention Start Date March 31, 2022 March 31, 2023
Primary Outcomes (End Points) The main variable of interest is the probability of an individual being hired in different treatments, controlled by ethnicity, scores and age. Another main variable is the wage that an individual being offered in different treatments, controlled by ethnicity, scores and age Secondary outcome variables are the percentage (%) of minority candidates being hired in different treatments and the differences in mean wage between majority candidates and minority candidates in different treatments. Overall Effect: The main outcomes of interest are how an equal pay policy impacts 1) the percentage of candidates hired, and 2) the average wage of hired candidates between two ethnic types.
Primary Outcomes (Explanation) We will compare the percentage of candidates hired that are minorities in Treatment 1 (NC-Fixed) and Treatment 2 (NC-Flexible) to identify the impact of an equal pay policy in the non-competitive labour market. Similarly, we will also compare the percentage of candidates hired that are minorities in Treatment 2 (C-Fixed) and Treatment 4 (C-Flexible) to identify the impact of an equal pay policy in the competitive labour market. We will also compare the average wage of hired candidates between majority and minority groups to identify the role of wage cost plays in the impact of an equal pay policy.
Experimental Design (Public) We design a two-stage hiring game where the two participants (i.e. employers) will see four candidates, and they must decide whether to hire them or not in the first stage. If they decide to hire the candidate, they then need to choose a wage for their hired candidate in stage 2. We will introduce an intermediate hiring competition or a flexible wage scheme in the different treatments. To allow for learning effects, the participants will play this two-stage game in 5 independent rounds. The experiment is based on a between-subject design. In the baseline treatment (Treatment A0), 2 employers will have a hiring competition if both employers decide to hire the same candidate, and they are free to choose different wage offer to different candidates (The profile of a candidate includes age, scores of a real effort task and their ethnicity information). As the main experimental variation (Treatment B0), we consider a non-competitive treatment where employers are free to choose different wage offer and always hire the preferred candidate without competition. We will introduce a reservation wage, R0, for each candidate. In the competitive environment (e.g. Treatment A0), one employer need to choose a wage higher than R0 to successfully hire the preferred candidate and the other employer need to choose a wage higher than 25-R0 to successfully hire the preferred candidate. R0 ranges from [5, ∞]. Therefore, in the baseline treatments, there is an implicit minimum wage of 5 points. In the main treatments, 2 employers face different minimum wage policies: low minimum wage and high minimum wage under competitive environment (Treatment AL and Treatment AH) and under non-competitive environment (Treatment BL and Treatment BH). The experiment is designed to examine the assumption that the employment elasticity for minority workers should be smaller than the employment elasticity workers if employers hold a bias and incur additional utility costs from hiring minority workers. And it also tests if the impact between a minimum wage and a much higher minimum wage on employer discrimination is different. This experiment consists of two phases: 1) the preliminary phase, in which we aim to recruit 150 participants to complete a series of anagram tasks; and 2) the main phase, in which we aim to recruit 100 participants for each of the four treatments to complete a hiring task (i.e., 400 participants in total). In the preliminary phase, participants will be asked to complete five 2-minute anagram tasks individually and paid by piece-rate performance. This phase is designed to generate actual profiles of candidates to be used in the main phase of the experiment. The benefit of using actual profiles is to introduce real consequences for discriminatory behaviour and therefore capture the actual level of employer discrimination (Hedegaard & Tyran, 2018). To construct a balanced candidates pool for the second phase, 75 participants will be recruited from an ethnic minority group (i.e., East Asians) and the remaining 75 will be recruited from the ethnic majority group (i.e., Whites). Out of the five performances, we drop the lowest and the highest scores to form the final candidate profiles. And we randomly choose 2 scores from the rest of 3 scores remaining as the pre-performance score and interview performance score In the main phase of the experiment, participants will be asked to finish a manager task to make some hiring decisions, given a set of 4 pre-screened candidate profiles drawn from the data collected in the preliminary phase. Each participant in this phase will be assigned to one of the following four experimental treatments: an NC-Flexible treatment with neither the equal pay policy nor the hiring competition (Treatment 1), an NC-fixed treatment without the hiring competition, but with the equal pay policy that forces employers to offer the same wage to all desired candidates (Treatment 2), a C-Flexible treatment without the equal pay policy but with hiring competition in which each employer needs to compete with another employer in terms of wages for each desired candidates (Treatment 3), and a C-Fixed treatment with both equal pay policy and hiring competition. Note that we will only recruit participants from the ethnic majority group as employers/managers". Each set of the four candidates' profiles include 2 minority candidates and 2 majority candidates, which are randomly selected from the pool collected in the preliminary phase. The employer/manager is given the interview performances of all four candidates and is asked whether they want to hire or not hire for each candidate; and if they hire, what is the wage they are willing to offer. Each candidate will have an unknown reservation wage. Employer/manager can successfully hire the candidate if their wage offer is higher than candidate's reservation wage (Treatment 1 and 2), or if their wage offer is higher than both candidate's reservation wage and the other manager (competitor)'s wage offer to the same candidate (Treatment 3 and 4). The potential employer/manage will be able to select an identical wage offer (Treatment 2 and 4) or different wage offers to different candidates. On top of interview performances, the potential employer/manager will also be given candidates’ age, prolific id (not exactly the same as the real ID), and the ethnicity information (reflected through the surnames).
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