Ethnic tensions and the potential for ethnic discrimination characterize many countries around the world. The aim of the proposed project is to study the extent and the sources of discrimination against Israeli Arabs in online labor, housing, and consumer goods markets. The perception that Israeli Arabs suffer from discrimination is widespread, yet rigorous quantitative economic research on anti-Arab discrimination is rather limited. In its general approach the project follows the economics of discrimination literature and employs a correspondence methodology (in the current context – sending pairs of e-mails to online ads, where each pair contains distinctly ethnic, Arab and Jewish, names). The contribution of the proposed project is both substantive and methodological. The substantive contribution lies in the investigation of a topic which has to date received scant attention. The methodological contribution is twofold: (1) by including in some of the e-mails explicit expressions of willingness to pay a premium or requests for discounts it will be possible to monetize the extent of discrimination; (2) by conducting follow-up surveys it will be possible to characterize the discriminators and to identify how views regarding Arabs are associated with actual discriminatory behavior. Discrimination leads to economic segregation which reduces the potentially large gains from trade between Arabs and Jews. By documenting and attempting to explain patterns of discrimination, the project may influence the formulation of policies aimed at reducing discrimination. Improved economic relations between Arabs and Jews hold the potential to spill over to the social and political spheres. In light of the increase in ethnic tensions brought about by the terrorist attacks and other politically charged events of the last decade, the lessons learned from the proposed research could prove useful in shedding light on important questions which are relevant for EU countries.
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