Product Market Structure and Labor Market Discrimination

7. New Estimates of Discrimination against Men with Disabilities:The Role of Customer Interaction in the Product Market

Chapter 7 New Estimates of Discrimination against Men with Disabilities The Role of Customer Interaction in the Product Market Marjorie L. Baldwin Introduction In his seminal theory of discrimination, Gary Becker (1957) postulates that discrimination in the labor market can arise from three sources: employers , coworkers, or customers. Whatever the source, the motivation for discrimination is assumed to be individual prejudice against a minority group, manifested by a willingness to incur costs to avoid that group. Becker’s theory develops all three potential sources of discrimination, but empirical studies of discrimination typically assume employers are the source. Moreover, most empirical studies provide no direct tests of the assumptions that prejudice motivates discrimination, or that employers are the source. Persons with disabilities are a minority group with unique characteristics that make it possible to test aspects of Becker’s theory. The group is extremely heterogeneous, with natural subgroups defined by different health impairments that are subject to different degrees of prejudice and discrimination in the labor market. Quantitative rankings of the intensity of prejudice toward different impairments are available from attitude studies conducted over the last three decades (e.g., Albrecht, Walker, and Levy, 1982; Royal and Roberts 1987; Tringo, 1970; Westbrook, Legge, and Pennay , 1993; Yuker, 1987) and studies of disability-related discrimination have tested the correspondence between the prejudice rankings and measures of wage discrimination for different impairment groups (Baldwin and 125 Johnson, 1994; Hendricks, Schrio-Geist, and Broadbent, 1997; Johnson and Lambrinos, 1987; Salkever and Domino, 2000). The studies find weak positive correlations between intensity of prejudice and estimated discriminatory wage differentials, which is consistent with the assumption that prejudice motivates discrimination. Still, the full potential for studies of disability -related discrimination to test Becker’s theory has not been explored. This chapter provides new estimates of discrimination against men with disabilities using the 1996 Survey of Income and Program Participation (SIPP). The two objectives are, first, to compare the new estimates to those from earlier years to examine changes in the years following passage of the Americans with Disabilities Act of 1990 (ADA) and, second, to examine the role of customers as a source of discrimination against men with disabilities. Customers hold the same types of prejudices as do employers or coworkers, but have more limited opportunities to identify members of a disfavored group. When gender or racial discrimination is the issue, identification is often fairly easy. With disability-related discrimination, identification is more complex as many disabling conditions are unobservable in casual interactions. The opportunity for customers to indulge their prejudices against persons with disabilities depends on the visibility of the condition and whether the product market entails sufficient interaction between customer and employee to reveal the condition. I use visibility rankings of different health conditions, together with product market characteristics, to test the hypothesis that customers are a source of disability-related discrimination. To my knowledge, this is the first test of customer discrimination against workers with disabilities. The chapter is organized as follows. The next section defines important terms for a study of disability-related discrimination. The third section provides background on theoretical models of customer discrimination, derives characteristics of the product market conducive to customer discrimination , and summarizes related empirical studies. The fourth section describes the data and defines analysis groups based on rankings of health conditions by prejudice and visibility. The methods used to estimate disability -related discrimination are described in the fifth section. The sixth section presents results and the seventh section concludes. Defining Disability-Related Discrimination Labor market discrimination occurs when groups of workers with equal average productivity are paid different average wages or face different opportunities for employment. Wage discrimination is measured 126 Marjorie L. Baldwin as the difference between the mean wages of majority and minority workers that cannot be attributed to differences in the groups’ productivityrelated characteristics. Discrimination is measured between groups of workers rather than between individuals because individual wages and employment opportunities vary with random factors that cannot be dissociated from discrimination. Comparisons between representative groups of majority and minority workers eliminate the effect of random influences so that the effect of discrimination can be isolated, provided that differences in average productivity are controlled adequately. This is a particular challenge in studies of disability-related discrimination because the presence of a disability typically is associated with functional limitations that reduce a worker’s productivity in some types of jobs. An analysis of disability...