Are unemployed minorities doubly disadvantaged in the job market?


by Gunn Elisabeth Birkelund, Kristian Heggebø, and Jon Rogstad

People who are unemployed often have difficulties getting back into the labor market, particularly if the unemployment spell is long-lasting. This penalty is called the “scarring effect” of unemployment.

We also know that employers discriminate against ethnic minorities when they apply for a job. It is therefore important to examine how employers react to job applications from unemployed minorities. Long-term unemployment rose in the wake of the 2008 economic crisis, and we wanted to explore if the scarring effects of unemployment were more harmful to ethnic minorities than for the majority.

Our new research explores how employers react to job applications from long-term unemployed ethnic minorities. We compared employers’ response to unemployed minority job applicants with their response to three other groups: employed majority job applicants, unemployed majority job applicants, and employed minority job applicants.

We found that unemployed ethnic minorities received the lowest response of all four groups, whereas majority applicants already at work received the highest callbacks. But our results from a field experiment in Norway show that the penalty for being unemployed was similar for both the majority and the minority group.

In the experiment, we found an ethnic gap of 12 percent in employers’ callback to long-term unemployed applicants (33 percent versus 21 percent). We found the same ethnic gap when we compared job applicants who were already inside the labor market when they applied for a job (51 percent versus 39 percent).  Thus, the ethnic penalties were the same among the unemployed as among the employed.

The study

We studied this topic in Norway, a Scandinavian welfare state with a rapidly growing immigrant population.  Today the immigrant population comprises about 16 percent of the population, on par with the USA.

We conducted two waves of a field experiment in Oslo (2011-2013) as we believe randomized field experiments are the best way to measure discrimination. We included a period of one-and-a-half years of unemployment for half of the applicants. This is a substantial period of unemployment, and as expected, we found that employers were very skeptical of applicants with long-term unemployment spells (for both ethnic groups, we found an 18 percentage point drop for callbacks to the unemployed).

We aimed at comparing only groups that are identical in all relevant characteristics. We therefore did not include first-generation immigrants in our experiments, since they often have language difficulties. Instead, we included were second generation immigrants with Norwegian education and Pakistani immigrant parents. All applicants were in their mid-20s and had identical education and work experience.

Why do employers hesitate to hire unemployed job applicants?

There are two main reasons for the scarring effect. First, employers might be reluctant to hire unemployed job applicants, thinking there is something wrong with these applicants since they have previously not succeeded in finding a job. Since employers do not know these applicants, they might think that unemployed job applicants have negative unobserved characteristics. They might lack adequate working motivations, or lack social skills and therefore be difficult to relate to for others at the workplace.

The second reason why employers might hesitate to hire an unemployed job applicant is that unemployed people may suffer an actual loss of competence while they are out of work. They lose work experience and relevant updating of their human capital such as new computer courses. This is.  Both these arguments imply a vicious circle of disadvantage, where it gets harder for unemployed people to find a job the longer they have been out of the labor market.

Why do employers discriminate against ethnic minorities?

This question is hard to answer and there are several theoretical models that compete to explain discrimination. Those models include discrimination based on stereotypes and prejudice, statistical discrimination, and discrimination due to employers’ unconscious bias.

Why do employers not punish unemployed minority applicants more than unemployed majority applicants?

Employers have two reasons to be skeptical about job applications from unemployed minorities. And this is what we find. The negative effect of unemployment adds to the negative effect of minority status, so that unemployed minorities have the lowest callback of all groups.

Yet employers might be aware that ethnic minorities are more likely to be unemployed at the outset and think they deserve a chance. They might also find unemployment among the majority population stigmatizing, thinking they probably have some unobserved negative characteristics that can explain why they are out of work. Thus, employers might regard unemployment as equally bad in the majority population, which is what we find.

Overall, our research shows that unemployed ethnic minorities suffer an additive and not a multiplicative disadvantage.

Gunn Elisabeth Birkelund is Professor of Sociology at the University of Oslo. Kristian Heggebø is a postdoctoral researcher at the University College of Oslo and Akershus. Jon Rogstad is a research director at Fafo Research Institute, Oslo. 

This article is based on their collaborative paper “Additive or Multiplicative Disadvantage? The Scarring Effects of Unemployment for Ethnic Minorities” in European Sociological Review.

Image: FEMA/Michael Raphael via Wikimedia Commons

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