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Are Reports of Discrimination Valid? Considering the Moral Hazard Effect


Coleman, Major G.; Darity, William A., Jr.; & Sharpe, Rhonda Vonshay (2008). Are Reports of Discrimination Valid? Considering the Moral Hazard Effect. American Journal of Economics and Sociology, 67(2), 149-175.


Antidiscrimination laws are designed to prompt employers to stop excluding black workers from jobs they offer and from treating them unequally with respect to promotion and salaries once on the job. However, a moral hazard effect can arise if the existence of the laws leads black employees to bring unjustified claims of discrimination against employers. It has been argued that employers may become more reluctant to hire black workers for fear of being subjected to frivolous lawsuits. Using the Multi-City Study of Urban Inequality (MCSUI), we find that male and female black workers are far more likely than whites to report racial discrimination at work. This is the case even when a host of human capital and labor market factors are controlled for. Further, nearly all black workers who report they have been discriminated against on the job in the MCSUI Surveys also show statistical evidence of wage discrimination. This is not the case for white males or females. We find little evidence to support a moral hazard effect.


Reference Type

Journal Article

Year Published


Journal Title

American Journal of Economics and Sociology


Coleman, Major G.
Darity, William A., Jr.
Sharpe, Rhonda Vonshay