Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail?

Andrea Weber and Christine Zulehner

No 4526, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: According to Becker's (1957) famous theory on discrimination, entrepreneurs with a strong prejudice against female workers forgo profits by submitting to their tastes. In a competitive market their firms lack efficiency and are therefore forced to leave. We present new empirical evidence for this prediction by studying the survival of startup firms in a large longitudinal matched employer-employee data set from Austria. Our results show that firms with strong preferences for discrimination, i.e. a low share of female employees relatively to the industry average, have significantly shorter survival rates. This is especially relevant for firms starting out with female shares in the lower tail of the distribution. They exit about 18 months earlier than firms with a median share of females. We see no differences in survival between firms at the top of the female share distribution and at the median, though. We further document that highly discriminatory firms that manage to survive submit to market powers and increase their female workforce over time.

Keywords: firm survival; profitability; female employment; discrimination; matched employer-employee data; market test (search for similar items in EconPapers)
JEL-codes: J16 J71 L25 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009-10
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - published in: Journal of the European Economic Association, 2014, 12(2), 492-521

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https://docs.iza.org/dp4526.pdf (application/pdf)

Related works:
Journal Article: COMPETITION AND GENDER PREJUDICE: ARE DISCRIMINATORY EMPLOYERS DOOMED TO FAIL? (2014)
Working Paper: Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail? (2009)
Working Paper: Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail? (2009)
Working Paper: Competition and Gender Prejudice: Are Discriminatory Employers Doomed to Fail? (2009)
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