Age Discrimination across the Business Cycle

Abstract

A key prediction of discrimination models is that competition in the labor market serves as a moderating force on employer discrimination. In the presence of market frictions, however, recessions create excess labor supply and thus generate opportunities to engage in discriminatory behaviors far more cheaply. A natural question arises: does discrimination increase during recessions? We focus on age discrimination and test this hypothesis in two ways. We first use employee discrimination charges filed with the Equal Employment Opportunity Commission (EEOC), along with an objective measure of the quality of those charges. For each one percentage point increase in a state-industry's monthly unemployment rate, the volume of age discrimination firing and hiring charges increases by 4.8% and 3.4%, respectively. Even though the incentive to file weaker claims is stronger when unemployment is high, the fraction of meritorious claims also increases significantly when labor market conditions deteriorate. This is a sufficient condition for real (versus merely reported) discrimination to be increasing under mild assumptions. Second, we repurpose data from a correspondence study in which fictitious resumes of women were randomly assigned older versus younger ages and circulated across different cities and time periods during the recovery from the Great Recession. Each one percentage point increase in the local unemployment rate reduces the relative callback rate for older women by 14%.

Why is Workplace Sexual Harassment Underreported? The Value of Outside Options Amid the Threat of Retaliation

“…The EEOC assigns a merit designation to a case if either the company settles with the employee, the claimant withdraws their case upon the receipt of benefits, or the EEOC makes a determination that the case has reasonable cause following a lengthy legal investigation. 12 For more details on how charges are resolved, see Dahl and Knepper (2020).…”

“…Following Maestas et al (2021) and Dahl and Knepper (2020), our main independent variable of interest is the number unemployed, rather than the unemployment rate. We do this to sidestep any potential confounding effects introduced by industry-state-time differences in the size of the labor force.…”

“…Labor Demand Shocks and the Selectivity of ChargesWe first estimate the effect of local labor market slackness on the selectivity/quality of sexual harassment charges filed with the EEOC much in the spirit ofMaestas et al (2021), who study the relationship between labor market conditions and disability insurance claims at the state-month level. LikeDahl and Knepper (2020), we exploit rich monthly heterogeneity in exposure to downturns across both geography and industries. We combine data on state-month unemployment from the LAUS with national industry-month unemployment and state-industry-month employment from the QCEW to impute U jst , the number of unemployed individuals in a state-industry-month.20 …”

Early Evidence on the Impact of Coronavirus Disease 2019 (COVID-19) and the Recession on Older Workers

“…Older workers took longer to find work during and after the Great Recession ( Neumark & Button, 2014 ), and unemployed workers in their 50s also faced steeper wage losses than younger workers ( Johnson & Butrica, 2012 ). Age discrimination in hiring also increases during recessions ( Dahl & Knepper, 2020 ), contributing to the longer unemployment durations for older workers. Age discrimination in hiring is a significant barrier for older workers, who often rely upon temporary jobs—called bridge jobs—to delay retirement ( Neumark et al, 2019 ).…”

“…Even if older people brave the elevated risks of applying for new jobs, they may face even more age discrimination in addition to the high levels already occurring, especially during recessions ( Dahl & Knepper, 2020 ; Neumark & Button, 2014 ). Employers may, for example, assume that older people are riskier to employ because their age group is statistically more susceptible to COVID-19.…”